group managing director’s review of operations Bank Muamalat Malaysia Berhad and Rangkai positif...

group managing director’sreview of operations

DRB-HICOM BERHADannual report 2010

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DATO’ SRI HAJI MOHD KHAMIL BIN JAMILGroup Managing Director

Since a restructuring of the Group that began in 2006, DRB-HICOM has transformed into an ‘entrepreneurial conglomerate’. This is most evident in the Services Sector which has outstripped both Automotive and property & Infrastructure in terms of growth and profitability in the last three years. last year, it more than doubled our projections to contribute 40.54% of total Group revenue. Behind the sector’s outstanding performance is a renewed sense of innovation; the ability of the individual companies to think out of the box so as to increase their revenue streams. Kl Airport services (KlAs), for example, initially struggled with a low level of business from KliA. then, it turned its focus towards the low-cost carrier businesses. Today, it has captured the budget airline market.

In our day-to-day business activities and decision-making, the Group is guided by sound management policies and standard operating procedures (SOp). At the same time, there is constant review of our business models, taking into account changes in the economic and political environment, locally and globally. The quarterly CEO’s Dialogue, at which all business leaders within the Group analyse their performance and discuss issues and challenges, has proven to be invaluable in re-aligning ourselves to the evolving marketplace.

HIGHLIGHTS OF THE YEARBearish conditions last year led us to challenge all our CEOs to further tighten their belts and achieve cost savings of 1.5% of their companies’ turnovers. I personally share with our senior management my philosophy that for every ringgit earned, 30 sen should be saved. Such prudence will serve us well in a marketplace that can only be expected to become more competitive.

The revised National Automotive policy (NAp), introduced in October 2009, inv i tes fore ign manufacturers into the country. To compete successfully within this liberalised environment, we will need to prove ourselves to be a world-class automotive company. This is no doubt a challenge, yet one we embrace as it is already part of our blueprint to elevate

not just DRB-HICOM, but the nation, to a regional automotive hub. The establishment of the International College of Automotive (ICAM) in March 2010 marks our commitment towards this end. In terms of capabilities, we are already implementing best-of-class systems and technologies in our manufacturing. In particular, I am very excited about having introduced the HICOM Management System in our assembly plants in pekan, pahang, which will further increase quality, efficiency, productivity and delivery.

The revised NAp also requires manufacturers to increase the use of locally-made parts in their production lines. This translates into a direct benefit for DRB-HICOM’s components manufacturers, and we expect a high level of growth among these companies.

Although we deliberately kept our property & Infrastructure Sector quiet last year by holding back planned launches, there was sufficient buzz behind the scenes. In fact, the one word that encapsulates this sector for the year under review is ‘regenesis’. In March 2010, we rebranded almost the entire sector under Glenmarie properties Sdn. Bhd., capitalising on the Glenmarie lifestyle brand. Business operations within this sector have been reorganised into four distinct operating units: property Development, Construction, Asset Management and facilities Management. In addition, as part of the Group restructuring, we have been disposing of operating companies that do not form part of our core businesses or that do not add value to the Group. Towards this end, last year we disposed of five non-performing estates in Kedah, melaka and negeri sembilan. At the same time, we have acquired 1,517-acre in a picturesque area within the Iskandar development in Johor Bahru, which holds the potential of becoming a jewel in the crown of DRB-HICOM’s property sector.

The entire Services Sector performed very well, the results this year further augmented by the full-year contribution of two acquisitions made end 2008 – Bank Muamalat Malaysia Berhad and Rangkai positif Sdn. Bhd.

I feel great pride in presenting to you DRB-HICOM’s operational review for the year ended 31 March 2010. It was a year which, by all accounts, was challenging. we began towards the tail end of an economic meltdown that has been described as one of the worst in history. yet, DRB-HICOM managed to post a profit before tax of RM657.9 million on the back of revenue of RM6.31 billion, an increase from RM6.1 billion in the last financial year. It was the highest revenue the Group has recorded since year 2000, which in itself is an accomplishment. That it was achieved within the context of a battered global economy is testament to fundamentals that have seen the Group grow from strength to strength.

we anticipated the possible repercussions and effects of the subprime crisis in the uS and the credit squeeze from Europe from as early as 2007 and early 2008 respectively, and had put in place various strategies to cope with the different possible scenarios. when the crises hit Malaysian shores, therefore, we were prepared. This readiness contributed significantly to our performance. Hence, although I am pleased with our financial results, they did not come as a surprise. If anything, I believe we had the potential to do even better.


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DRB-HICOM is the largest automotive group in Malaysia, with interests along the entire value chain of the industry from import activities to the production, distribution and maintenance of vehicles for the passenger, commercial, motorcycle and defence markets. In the year under review, the Sector accounted for 57.04% of total DRB-HICOM revenue. This was achieved by a combination of strategies that included aggressive cost reduction, tight controls on inventories and the introduction of forex hedging. To further strengthen our foothold in the industry, the Group continued to enhance its customer relationship management (CRM), focusing particularly on excellent after-sales and service delivery.

AUTOMOTIVESECTOR

group managing director’s review of operations (continued)


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AUTOMOTIVE DISTRIBUTIONDRB-HICOM has a stake in the distribution of leading car brands in Malaysia – Audi, Honda, Mahindra, Mitsubishi, proton, Suzuki – as well as Isuzu trucks and pick-ups, HICOM perkasa light-duty trucks and MODENAS motorbikes.

performance on the whole of our distribution companies was affected by the economic slowdown, which led to a 2.05% drop in Total Industry Volume (TIV) – namely the total number of automotive units sold in the industry nationally – to 536,905. Despite the downturn, a number of our more established companies remained unscathed by the global crisis, and even achieved record performance.

winds of change were experienced towards the fourth quarter of the year when, aided by proactive measures by the Government including the second stimulus package of RM60 billion announced on 10 March 2009, and lower interest rates for hire purchase (Hp) by banks, the market began to pick up again. In anticipation of further recovery in the economy, the Group expects a stronger performance in 2010 across all its companies.

One of the Group’s top performers for the year was Honda Malaysia Sdn. Bhd. (Honda Malaysia), which sold more units in 2009 than in any year since its inception in 2000, managing simultaneously to increase its market share from 5.9% in 2008 to 7.2%. Honda City continued to drive the company’s stellar performance, responsible for 43% of the company’s total sales. Buoyed by healthy sales figures, Honda Malaysia launched the All New freed on 22 April 2010, creating an entirely new segment for compact premium MpVs. The company is confident of achieving its sales target of 40,000 units for the year 2010, 6.3% more than the 37,631 units sold in 2009.

Edaran Otomobil Nasional Berhad (EON), the leading proton car sales and services company in the country, is also an authorised distributor and retailer of Mitsubishi and Audi models via subsidiaries Mitsubishi Motors Malaysia Sdn. Bhd. and Euromobil Sdn. Bhd. In the year under review, EON sold 33,439 new proton vehicles and serviced 279,460 units. EON Group achieved RM2,024.3 million in total revenue and profit before tax of RM44.3 million.

following a Master Dealership Agreement (MDA) signed with proton Edar Sdn. Bhd. (pESB) on 8 May 2009, EON is limited to operating only 32 branches. This led to a RM20 million restructuring exercise to merge its sales and after sales branches, and to close eight branches. EON also plans to relocate non-performing branches to areas with higher potential, such as Kota Kinabalu and taiping. We expect the exercise to be beneficial in the long term as a result of greater operational efficiency and the provision of more integrated services to customers. Also as part of the MDA, each branch is to display the new proton corporate identity. EON’s 32 sales and service centres will be renovated accordingly over a span of three years. Dedicated Customer Relation personnel (CRp) are being stationed at these centres to manage customers’ sales and after-sales needs.


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Mitsubishi Motors Malaysia Sdn. Bhd. (Mitsubishi Motors Malaysia) was another high-performer, recording a 16% increase in vehicle sales to 8,433 units from end March 2009 to end March 2010. The company has exclusive rights to distribute Mitsubishi vehicles in Malaysia, its current line-up including the lancer 2.0GT sedan, Grandis MpV, multiple award-winning Triton pick-up truck and the all-new pajero Sport SuV, which has also garnered numerous awards. In 2010/11, Mitsubishi Motors Malaysia aims to increase its vehicle sales to 12,000 units, and to further expand its sales and service network nationwide.

The Group’s luxury car marque, Audi, is distributed by Euromobil Sdn. Bhd. (Euromobil). Despite the challenging economic outlook, Euromobil sold 476 Audi models in the financial year under review, marking a 102% increase from 2008/09 and expanding its market share in the luxury segment from 2% to 5%. prospects for 2010 are equally promising, with the introduction of the Audi R8 V10, Audi A5 2.0 TfSI coupe and variants of popular current models. Euromobil already has orders for 680 new cars, and sales is expected to surpass the 700-unit mark in the coming year. In anticipation of greater sales and service requirements, the company is opening two new service centres – one in Kuala lumpur and the other, a state-of-the-art 3s (sales, service and spare parts) centre, in Queensbay, penang.

wholly-owned subsidiary Automotive Corporation (Malaysia) Sdn. Bhd. (ACM) is the sole distributor for HICOM perkasa, as well as the franchised holder and distributor for Isuzu medium-heavy duty trucks. It is also a dealer of the Isuzu D-Max pick-up for Isuzu Malaysia Sdn. Bhd. Although the total industry volume (TIV) of light and heavy-duty trucks dropped by 17% and 16% respectively, ACM posted a healthy performance, mainly as a result of demand from government agencies and fleet operators, together with strong collaboration with DRB-HICOM Defence Technologies Sdn. Bhd. (DEfTECH). ACM also established itself as a leader in the light and medium duty segment (5,000 kg GVw), capturing 30% of this market. ACM did the Group proud by winning the frost

& Sullivan 2009 Best performing light Commercial Vehicle Company. To maintain its momentum, the company will be conducting roadshows and showroom programmes run by branches and dealers; and will set up a special fleet sales unit.

It was also a good year for Suzuki Malaysia Automobile Sdn. Bhd. (SMA), which recorded total sales of 5,588 units, an increase of 13% from the previous year. suzuki’s star model was the swift cKD, assembled in our pekan Automotive Complex, which made up 75% of its sales. SMA’s successes to date can be attributed to excellent sales & after-sales service. Not prepared to rest on its laurels, the company has embarked on a Kaizen (continuous improvement) programme which focuses on teamwork, morale and discipline. Along with the firm plan to introduce two new variants this year – Alto (class A) and Kizashi (class D) – smA aims to further increase its market penetration in 2010.

wholly-owned USF-HICOM (Malaysia) Sdn. Bhd. (uSf-HICOM) is the sole distributor in Malaysia of the range of vehicles produced by leading Indian automotive company, Mahindra & Mahindra limited. To date, it has introduced two SuV models – the Mahindra Scorpio 2.0l petrol and Mahindra Scorpio 2.5l diesel engine. In the second quarter of 2010, uSf-HICOM plans to launch the much-awaited automatic version of the Mahindra 2.2l diesel and other variants of the brand. The company is backed by a growing sales and service network across peninsular and East Malaysia.

Isuzu Malaysia Sdn. Bhd. (Isuzu Malaysia) markets and distributes the Isuzu D-max, one of the most popular pick-up trucks in the world due to its superior fuel efficiency, durability, reliability and comfort. And its popularity is rising. The company recorded its highest ever sales of the pick-up truck – 5,048 units – in the year under review. J. D. Power Asia Pacific 2009 Malaysia ranked the Isuzu brand the highest in its Sales Satisfaction Index Study, reflecting Isuzu Malaysia’s unbeatable standards in delivery, processes, dealer facilities and quality of its sales staff.

AuTOMOTIVE SECTOR

group managing director’sreview of operations (continued)


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EUROMOBIL SOLD 476 AUDI MODELS IN THE FINANCIAL YEAR UNDER REVIEW, EXPANDING

ITS MARKET SHARE IN THE LUXURY SEGMENT FROM 2% TO 5%.


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In the motorcycle segment, Motosikal Dan Enjin Nasional Sdn. Bhd. (MODENAS) turned in a commendable performance, selling 45,803 units and capturing 10% of the market. This positions MODENAS motorcycles third after Honda and yamaha. The company is confident of growing its sales as the economy recovers, together with new launches in the year. These include the introduction in february 2010 of the CT100, and a new model line-up in the second quarter of 2010/11. MODENAS also holds the key to an eagerly awaited electric motorcycle, the country’s first, which is to be launched within the year. In total, MODENAS is targeting motorcycle sales of 65,000 units in 2010, which will give it a 14% share of the market. Sales will be further enhanced by making inroads into Thailand, Cambodia, laos and Vietnam. Its export target is 7,000 units.

The import of completely built-up vehicles falls under the purview of DRB-HICOM Auto Solutions Sdn. Bhd. (DHAS). DHAS imports for six brands in the Group, namely Suzuki, Honda, Mitsubishi, Isuzu, Audi and Mahindra. In the year under review, DHAS began importing for the Volkswagen Group Malaysia Sdn. Bhd., bringing the total of imported vehicles to 13,591. The vehicles undergo pre-delivery inspection (pDI) at two main centres – the Peramu Jaya Automotive Complex in pekan, pahang; and in Section 27 Shah Alam, Selangor. Value added services include storage and delivery of the vehicle to the dealer’s network. Both pDI centres were ISO 9001:2000 certified in January 2009, their certifications upgraded to iso 9001:2008 in January 2010.

whol ly-owned subsidiary DRB-HICOM Defence Technologies Sdn. Bhd. (DEfTECH) caters primarily to the needs of the defence industry, offering a range of land-based military vehicles as well as providing

AuTOMOTIVE SECTOR


EXPERTISE GAINED SINCE ITS ESTABLISHMENT IN1996 AND VIA STRATEGIC INTERNATIONAL PARTNERS ENABLE DEFTECH TO SUPPORT THE GOVERNMENT IN ITS ENDEAVOUR TO CREATE A SELF-RELIANT DEFENCE INDUSTRY.


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maintenance and refurbishment services through its subsidiary Defence Service Sdn. Bhd. Expertise gained since its establishment in 1996 and via strategic international partners enable DEfTECH to support the government in its endeavour to create a self-reliant industry.

On 23 March 2010, DEfTECH secured a letter of Intent (lOI) from the Ministry of Defence to design, develop, manufacture and supply 257 indigenous AV 8x8 Armoured Wheel Vehicles (AWVs). DeFtecH has since embarked on a series of negotiations with potential technical partners to see to the successful delivery of this contract.

The company has diversified into supplying buses to Syarikat prasarana Negara Berhad (SpNB, or the National Infrastructure Company limited), and made a significant breakthrough in expanding its customer base by winning a contract to build Mobile police Stations for the Royal Malaysian police. It is confident of an enhanced performance in 2010/11 given continued orders from the Ministry of Defence for the Handalan trucks including its maintenance and spare parts, and the new businesses established.

MANUFACTURING & ENGINEERINGThe Manufacturing & Engineering division of DRB-HICOM forms the bedrock upon which the automotive sector is built. DRB-HICOM’s world-class assembly lines in pekan and Melaka produce, among others, top-of-the-range Mercedes-Benz, Suzuki and Honda cars as well as Isuzu pick-ups and trucks. feeding into these assembly plants are Tier 1 manufacturers of parts and components that supply not only to DRB-HICOM but a growing number of independent original equipment manufacturers (OEMs), both in Malaysia and abroad. In partnership with global automakers, DRB-HICOM has also grown the expertise to produce engines for leading motorbike brands Honda, yamaha and Suzuki, while successfully designing, developing and manufacturing nat ional motorbike brand MODENAS.

The division performed better than expected due to strong demand for locally-manufactured cars.

PHN Industry Sdn. Bhd. (pHN Industry) is a specialist in metal-based automotive components, and the largest small and medium dies manufacturer in Malaysia. pHN Industry produces medium to large automotive components, principally for proton, perodua, Toyota and Honda. It recorded RM250 million in sales and RM9.4 million in pre-tax profit, both of which exceeded expectations. Sales were boosted by the popularity of new proton models, namely the New Saga, Exora and persona; as well as that of perodua’s Myvi and Viva, and to an extent, Honda.

To ensure sustainable growth, pHN Industry plans to balance its currently proton-heavy portfolio more evenly. This will be aided by the development of new car models by perodua, Honda, Suzuki and Isuzu for which there will be greater localisation of parts, as required by the revised National Automotive policy. By supplying just 11 localised parts in Honda, pHN Industry can expect additional revenue of RM18.4 million. This will help strengthen pHN Industry’s position and enable it to better face the challenges of trade liberalisation.

“DRB-HICOM’s world-class assembly lines in pekan and Melaka produce, among others, top-of-the-range Mercedes-Benz, Suzuki and Honda cars as well as Isuzu pick-ups and trucks.”


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HICOM-Teck See Manufacturing Malaysia Sdn. Bhd. (HTS), the largest plastic automotive vendor in the country, produces instrument panels, door trims, bumper fascias, door brackets and class-A surface painted products. The company expanded its business base last year, supplying bumpers for perodua Viva Elite and Alza, and undertaking bumper painting for proton Exora. It also supplied a new instrument panel variant and front bumper module for the new proton persona Elegance.

In addition, HTS secured a number of new projects. It is replacing perodua Myvi bumpers; manufacturing proton Saga facelift bumpers and waja Replacement instrument panels; and designing the new proton persona Replacement instrument panel. for Suzuki Malaysia, HTS is localising the Swift door trim and instrument panel assembly, and painting bumpers, side mirrors and door handles.

Through our wholly-owned subsidiary HICOM Diecastings Sdn. Bhd. (HICOM Diecastings), we have a presence in the supply of high and low pressure diecastings to the automotive industry. In the financial year 2009/10, the company’s sales revenue increased 4.8% to RM86 million from RM82 million in 2008/09. This was due primarily to strong performance by perodua, proton and motorcycle engine assemblers, especially HICOM-yamaha Manufacturing Malaysia Sdn. Bhd. The company’s business with proton more than tripled from RM4.8 million to RM15.8 million, while perodua contributed to 32% of HICOM Diecastings’ total sales revenue.

A highlight of the coming year will be the start of production for uS-based white Rodger, of the Emerson Group of Companies. locally, business with perodua is projected to increase by 25% in 2010/11 as a result of the localisation of Daihatsu Motor Corporation’s MyVi engine. HICOM Diecastings will focus on growing sales from the motorcycle and non-automotive sectors, and targets revenue of RM90 million in 2010/11.

In the overseas market, HTS supplies Chrysler’s Dodge Journey chromed door knobs to Brose in mexico and North America; and the ford focus door brackets to Brose Spain and Germany. Its plant in Thailand supplies General Motors Thailand (GMT) and a new client, Sanko Gosei Thailand.

while competition will remain stiff in the coming year, HTS is confident of increasing its exports and adding new value-added products and processes, such as chrome plated accessories, to maintain its position as a technology leader. HTS is participating in the malaysia-Japan Automotive industry corporation (mAJAico) programme which emphasises the lean production System (lpS) for cost improvement; and has been selected as one of 12 model companies to be benchmarked against for lpS in the automotive industry.

AuTOMOTIVE SECTOR



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Oriental Summit Industries Sdn. Bhd. (OSI) is the main chassis component manufacturer for front lower arm, rear axle suspension and lever parking brake for proton, perodua, Volvo, Toyota and other automotive OEMs. Technical collaborations with futaba Industrial co. ltd., Akashi Kikai industrial co. ltd. and Hiruta Kogyo co. are reflected in the quality of the company’s production processes that encompass stamping, welding, ED painting and assembly.

OSI serves as a sterling example of the rewards of stringent measures to optimise operational efficiencies. It made a spectacular turnaround from notching a loss of RM9.79 million to recording a profit before tax of RM9.71 million last year, on the back of RM160.23 million in revenue. Growth in the coming year is expected from business related to new proton and perodua models, and the replacement of other vehicles, such as the persona.

The Group’s vehicle assembly hub is located in the 240-acre peramu Industrial Estate in pekan, pahang. It is here that HICOM Automotive Manufacturers (Malaysia) Sdn. Bhd. (HAMM) assembles the Mercedes-Benz C, E and S classes and the Suzuki Swift passenger cars, as well as the Actros commercial vehicle, among others. In the financial year ending March 2010, HAMM churned out 9,497 vehicles, recording total revenue of RM49.77 million. Based on an award to assemble a premium model for Mercedes-Benz, as well as concerted efforts to increase the production of Suzuki, catering to customer demand, the company forecasts further growth and performance improvement in 2010/11.

ISUZU HICOM Malaysia Sdn. Bhd. (IHM) has made a name for itself from the assembly of the Isuzu D-Max pick-up and heavy-duty Isuzu trucks. In fact, it offers a complete range of contract assembly work for pick-up trucks and light and heavy duty trucks. IHM maintains the highest standards in safety and quality while keeping costs down uti l ising the Isuzu Manufacturing Management (IMM) system. Employees are constantly trained to increase their knowledge and technical skills; this includes on-the-job training in Japan.

As the manufacturer of the leading motorcycle brand, HICOM-HONDA Manufacturing Malaysia Sdn. Bhd. (HICOM-HONDA) enjoys an enviable edge; the company achieved above-target revenue and profit before tax of RM251 million and RM21 million respectively. The brand’s success is driven by a combination of highly focused efforts by the management to increase productivity, and a culture of innovation that inspires Honda engineers to constantly improve on the performance of their engines. The quest to develop models that are more fuel-efficient resonate with growing environment-consciousness among the public, and is a positive factor contributing to Honda’s continued popularity. the new KWWH 110cc moped is one of the fuel economy mopeds to be introduced in the market, and more will follow. The company is confident of dominating not less than 40% of the local motorbike market.

Although the motorcycle industry on the whole shrank by 50,000 units from the previous year, demand for yamaha motorcycles increased, and saw its market share inch up from 34% to 37%. This resulted in improved sales of engines by HICOM-Yamaha Manufacturing Malaysia Sdn. Bhd. (HICOM-yamaha) which recorded a net profit before tax of RM10.7 million, up from RM3.16 million in 2008/09. This impressive performance was fuelled in part by the introduction in May 2009 of the Ego scooter engine. To meet demand, production of the Ego engine averages 2,350 units per month. The company’s new multi-model assembly line can accommodate both mopeds and scooters, with a production capacity of 160,000 units a year.

As part of the Group’s restructuring, the management committee of DRB-HICOM made the strategic decision in 2009 to cease the operations of the loss-making HICOM Engineering Sdn. Bhd. (HICOM Engineering). Resources from the manufacturer of machine precision castings and assembled components will be diverted to more productive areas within the Group.


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This diversified sector encompasses the Group’s concession businesses – comprising solid waste management, vehicle inspection, airport services and power plant operations and maintenance – as well as financial services and trading companies. with greater emphasis on efficiency and quality service, the sector has picked up significantly over the last three years, providing added stability to the Group. last year, the fast-growing Services Sector earned RM2.6 billion in revenue, accounting for 40.54% of DRB-HICOM Group’s total revenue.

SERVICESSECTOR



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wholly-owned subsidiary PUSPAKOM Sdn. Bhd. (PusPAKom) is malaysia’s only comprehensive national vehicle inspection company. Incorporated in 1994, it was awarded a 15-year concession by the Government to undertake computerised vehicle inspections for all commercial vehicles. This concession was renewed in 2009 for another 15 years. leveraging on its expertise, PusPAKom has since 2003 extended its services to inspecting private vehicles prior to financing and auction. These non-mandatory services have proven to be quite lucrative, generating a total of RM66.4 million to date.

in order to provide comprehensive coverage of its services, PusPAKom has a network of 72 branches nationwide, which is complemented by two mobile units. collectively, PusPAKom currently performs more than three million inspections for more than 1.5 million customers annually. PusPAKom was one of the Group’s star performers in 2009/10, recording revenue of RM116.26 million and profit before taxation and zakat (pBTZ) of RM17.43 million. In order to step up its revenue, and service coverage, the company plans to extend its mobile service coverage. It is also in discussion with finance companies on the viability of requiring motorcycles to be inspected prior to any transfer of ownership.

Alam Flora Sdn. Bhd. (Alam flora) undertakes solid waste management services in Kuala lumpur, Putrajaya, selangor and Pahang. the company collects, transports and disposes of more than 2.1 million tons of waste annually, manages 11 landfills, supervises and monitors about 1,104 appointed contractors, and employs 3,237 staff with 689 vehicles at its disposal. It is the leading solid waste management company in Malaysia and one of the biggest private solid waste management companies in South East Asia.

Alam flora performed well in 2009/10, posting a revenue of RM587.47 million, up from RM576.03 million in the previous year and achieving pBTZ of RM39.02 million, representing 23% growth in profit from 2008/09. In preparation for full privatisation of the industry, Alam flora is striving for greater operational efficiencies and to create new revenue streams to increase its bottom line.


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It has earmarked various green businesses as possible areas to venture into. These include the trading of recyclables, the conversion of waste to energy, composting, green environmental products and consultancy services. Alam flora is investing in R&D in collaboration with local universities uKm and uitm on the systems and technologies required for these new businesses. It is also working with putrajaya Corporation on the feasibility of waste separation at source. This pilot project is supported by the National Solid waste Management Department, which has set aside funds for the construction of a composting facility in precinct 5, putrajaya.

Alam flora aims to secure the concession following the National privatisation of Solid waste Management, which is expected to be finalised by year end.

Established in 1995, KL Airport Services Sdn. Bhd. (KlAs) provides a comprehensive range of services to commercial airlines operating into and through Malaysian airports, from ground handling and cargo handling to inflight catering and aircraft maintenance & engineering services. in 2009/10, KlAs registered a profit before tax of RM8.04 million, exceeding expectations. This was mainly due to an increase in cargo handling; ground handling of additional flights by several low-cost carriers; new operations in langkawi as well as additional revenue from Kota Kinabalu and Kuching. KlAs also experienced growth in the customs freight business; and obtained new business – the handling of aerobridges in KliA.

In the year under review, it secured ground handling contracts with Tiger Airways, SEA Air, Silk Air, finnair, KAlstAr, Happy Air and eastar Jet; and in-flight catering contracts with Air Astana, Air Zimbabwe and GmG Airlines. over the years, KlAs has established a close working relationship with Malaysia Airports Holding Berhad (MAHB), with which it is collaborating to develop Malaysia into a next-generation aviation hub.

While KlAs already outperforms industry benchmarks in baggage and cargo handling as well as on-time departures, it constantly strives for greater efficiency and service delivery. in 2009/10, KlAs set up a training department to increase the professionalism and skills level of its customer service personnel. It also acquired new assets and upgraded existing equipment. To further sharpen its competitive edge, KlAs is focusing on value-for-money pricing as well as customised products and services. It predicts better performance in 2010/11 as the industry picks up, buoyed by an uplifted economy and further liberalisation of the regional aviation sector due to the ASEAN Open Sky policy.

Rangkai Positif Sdn. Bhd. (Rangkai positif), now into its second year in the DRB-HICOM Group, provides operations and maintenance services to the coal-fired 2,100Mw Tanjung Bin power plant. It recorded a strong performance in 2009/10, following a sharp rebound in electricity demand in the last three quarters of the financial year. Coal-fired power plants in the peninsula experienced an upsurge in demand as a result of a shortage in gas supply. Tanjung Bin also stood to benefit from an outage at a coal plant in

“KlAs predicts better performance in 2010/11 as the industry picks up, buoyed by an uplifted economy and further liberalisation of the regional aviation sector due to the ASEAN Open Sky policy.”


SERVICES SECTOR


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Kapar, making up to the loss in electricity generation during the outage period. Rangkai positif has a 25-year concession with Tanjung Bin Sdn. Bhd. beginning 28 September 2006, hence will generate a guaranteed and regular source of income to the Group until year 2031.

The Group also reaped the fruit of its acquisition of 70% equity in Bank Muamalat Malaysia Berhad (Bank Muamalat) in October 2008. Based on sound principles, Islamic banking as an industry remained robust in 2009, its total assets growing by double digits. Bank Muamalat enjoyed its fair share of this healthy showing, registering a pBTZ of RM142.06 million for the 15-month financial period ended 31 March 2010. Annualising the pBTZ to RM113.60 million entails a 158% increase from RM44.07 million in the financial year ended 31 December 2008. The higher profits were underpinned mainly by significant improvements in financing recoveries and asset quality.

The banking group’s total assets increased to RM16.7 billion, up 16.1% from a year ago, as a result of an increase in securities amounting to RM1.1 billion. At the same time, total financing outstanding rose 10.0% to RM6.6 billion. Asset quality, as gauged by the net Non-performing financing (Npf) ratio, improved to 3.0% from 4.4%. Customer deposits increased 19.9% to total RM14.9 billion. The capital adequacy of the bank, as measured by the Risk weighted Capital Ratio (RwCR), strengthened to 17.6% from 12.9%, arising from an injection of RM500 million by shareholders in March 2009.

The target for the bank now is to be more competitive. within the next 24 months, it is to secure a position among the top five Islamic banks in the country, with a return on equity (ROE) of 14%. Sustained real economic recovery will positively impact the Islamic banking industry, and create a conducive environment within which Bank Muamalat is able to evolve.

BANK MUAMALAT REGISTERED A PBTZ OF RM142.06 MILLION FOR

THE 15-MONTH FINANCIAL PERIOD ENDED

31 MARCH 2010.


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SERVICES SECTOR

During the financial year, uni.Asia General Insurance Berhad (uAG) restructured some of its core processes to enhance efficiency, productivity and service standards. Service turnaround time for critical functions including claims and policy processing were significantly improved. uAG also embarked on various cost saving initiatives and enhanced the capacity of its 26 branches by extending operating hours to facilitate vehicle owners to purchase insurance from the Malaysian Motor Insurance pool (MMIp).

During the financial year, uAG registered a gross premium income of RM397 million, a 3.1% reduction from RM410 million in the last financial year. At the same time, uAG strengthened its balance sheet significantly as a result of higher claims reserves that led to an overall claims incurred of RM320 million. uAG also managed to mitigate its loss before tax to RM24.3 million through higher contribution from improved earned premium income, MMIp commission, investment and other income totaling RM61 million.

we expect the general insurance landscape to continue to be challenging with greater market innovation and competition, and further liberalisation of the insurance sector. uAG has put together various business initiatives during the year and is confident of returning to profitability in the new financial year.

The life insurance industry, meanwhile, continued to expand during the year, partly because the penetration rate of life insurance among Malaysians stands at only 41%, leaving much room for growth. Uni.Asia Life Assurance Berhad (uAl) not only reflected the generally healthy performance of the industry, but posted its most profitable record for the year. The company registered a pre-tax profit of RM33.4 million. It emerged as the leader in Bancassurance through its new Regular premium products, registering growth of 69% against the industry’s 34%. In terms of annualised premium equivalent (ApE), through Bancassurance channel, uAl’s market share increased to 17.1% from 11.6%.

As for the overall new regular premium business from all channels, uAl improved its position from 10th to 8th in 2009, growing 44.6% against the industry’s 28.5%.

uAl will endeavour to entrench itself as a leader in its sector by expanding its distribution channels while strengthening its operational support, for example with an e-business platform for policy serving. uAl will seek new Bancassurance partners while aggressively driving innovative product packaging, recruiting fresh salesmen and expanding its tele-marketing and direct marketing initiatives. It will also form strategic partnerships with independent financial advisors and agency leader corporations, while supporting the Government’s initiative on microinsurance.

Scott & English (M) Sdn. Bhd. (Scott & English) is a premier engineering and trading group, involved in the import, distribution, assembly and provision of total service support for industrial, marine and heavy commercial engines. It serves diverse business sectors from mining and manufacturing to agriculture and plantation, logging, oil and gas, marine and transport. Its power and Industrial products include world-renowned brands like Cummins, fleetguard, Holset, TCM and Sullair.

The economic downturn affected sales of Scott & English, which dropped by 13.2%. However, the group performed better than expected, reporting total revenue of RM305.40 million with profit before tax of RM25 million. The power Division, responsible for the sales and marketing of Cummins products, faced the biggest challenge due to a decline in the shipbuilding industry worldwide. while its sales figures were shored up by the previous year’s orders, new monthly sales dropped significantly. The generator department, on the other hand, managed to increase its market share. The introduction of new fuel-saving electronic Q series and higher capacity generators will help to further enhance the performance of the generator department in coming years. Growth of the Industrial Division, meanwhile, will


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depend on demand for equipment such as TCM forklifts and Sullair air compressors from new manufacturing facilities in the country.

Midea Scott & English Electronics Sdn. Bhd. (Midea Scott & English Electronics), an associate company dealing in home appliances, turned in a healthy performance despite a general slump in the market. The company’s intensive brand awareness campaign created sufficient waves to increase sales of Midea goods by 27.5% over the previous year, achieving a

turnover of RM33.9 million. As Malaysians began to accept the new Chinese brand, they were introduced to a wider product range, which now includes stand and wall fans in addition to washing machines, refrigerators, chest freezers and electric rice/induction cookers. with the removal of 5% import duty of goods from China in 2010, we see great potential for growth of the company in the coming years.


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The Group has made a name for itself with an extensive portfolio of quality Glenmarie lifestyle developments that include residential, commercial and industrial projects. in addition, we are involved in township developments – Proton city and Kota Kemuning – and have a visible presence in niche areas within the hospitality industry. the year was quiet, but saw much groundwork in preparation for what promises to be a very exciting 2010/11.

PROPERTY& INFRASTRUCTURESECTOR



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In the last financial year, HICOM properties Sdn. Bhd., under which most of the Group’s property and infrastructure activities are consolidated, was restructured for better cost and operational efficiencies. As part of this reorganisation, on 8 March 2010, its name was changed to Glenmarie Properties Sdn. Bhd. (Glenmarie properties). The change was opportune as Glenmarie has established itself as a trusted brand in property development and is a leading player for residential, commercial and industrial development, with Glenmarie Court, Glenhill Saujana, Glenmarie Residences, Glenpark, Accentra Glenmarie and Glenmarie Industrial park under its banner. future developments include Glenmarie Garden, Glenmarie peak, Glenmarie Hill and Glenmarie Heights, Johor.

we have set our sights on Glenmarie properties becoming the most desirable brand in real estate, and are adopting ‘Opportunity-Driven Change’ to create this reality. The transformation will involve building new competencies, greater innovation, finding new markets, and forming strategic alliances to develop a compelling brand.

Glenmarie properties has five main core businesses:a. property developmentb. facilities managementc. property investmentd. hospitalitye. construction & infrastructure.

while the market on the whole was subdued in 2009, and many projects put on hold, Glenmarie properties forged ahead with plans to launch a number of significant developments with an estimated total gross development value of more than RM2.7 billion over the next three financial years.

September 2010 will see the launch of a new phase of single and double storey residential homes within proton City. This will be followed, in September, by the launch of Glenmarie Gardens, a low density development of 70 luxury designer


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bungalows featuring 14 different architectural themes on 32-acre of freehold land. Each home will have a built up area of a minimum of 5,900 sq ft, land area of more than 8,000 sq ft, and boast smart features. Also in September, 17 units of shop-offices will be launched in Glenpark 1.

The success of Glenpark 1 serves as a catalyst for the balance of this mixed residential development in Shah Alam. The Group plans to launch 384 double storey link houses in Glenpark 2, with a Gross Development Value of more than RM200 million, over the next one to three years.

The ‘riverfront lifestyle resort’ Glenmarie Cove is developed by Glenmarie Cove Development Sdn. Bhd. (GCDSB). This 200-acre freehold, exclusive enclave offers semi-Ds and bungalow villas built around landscaped boardwalks, parklands and lagoons.

Over the year, GCDSB has focused on marketing the enclave, especially precincts 2 and 4. Two innovative plans for precinct 2 were introduced – a straightforward cashback plan and a rebate scheme. As an added bonus, GCDSB is also offering free legal fees on the SpA for the purchase of the bungalows and Semi-Ds. Sales has picked up tremendously since the introduction of the rebate plan in March 2009, with 95% and 75% take-up rates for the 24 units of Rosea and 20 units of palmea. Currently, about 80% of the units launched in precinct 2 have been completed and are expected to be handed over by the end of 2010.

the township of Kota Kemuning, developed by HICOM-Gamuda Development Sdn. Bhd. (HICOM-Gamuda), is in its final phase of development with some small pockets of land re-planned to optimise land use efficiency and value. Most of the completed units have already been sold.

proton City, meanwhile, is being developed by Proton City Development Corporation Sdn. Bhd. (proton City Development Corporation), a joint venture between DRB-HICOM and perusahaan Otomobil Nasional Berhad (pROTON). proton City has been designed to

be a self-contained eco-sensitive intelligent city with superior technological and educational capabilities while providing a contemporary living environment that enriches its multicultural community. The nucleus of this 4,000-acre township 5km north of Tanjung Malim, perak, is a proton car assembly plant. This is supported by a host of commercial activities and the provision of ample, quality housing for those who will service these endeavours. proton City Development Corporation will be launching four residential parcels totalling 304 units of terrace, semi-D and cluster homes over the next three years. Market forces change during the development of townships, which can stretch up to 10 years. This is something we are keenly aware of, and are sensitive to. In the development of the rest of proton City, we are reviewing the expectations of the market and are making relevant changes. for example, industrial land in parcel 3 is being converted for commercial use, leveraging on the sale of part of the land to a leading retail store in Malaysia.

“while the market on the whole was subdued in 2009, Glenmarie properties forged ahead with plans to launch a number of significant developments with an estimated total gross development value of more than RM2.7 billion over the next three financial years.”


pROpERTy & INfRASTRuCTuRE SECTOR


72

THE TRANSFORMATION OF GLENMARIE PROPERTIES INTO THE MOST DESIRABLE

AND COMPELLING BRAND IN REAL ESTATE INVOLVES BUILDING NEW COMPETENCIES,

GREATER INNOVATION, FINDING NEW MARKETS, AND FORMING STRATEGIC

ALLIANCES.


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Another catalyst development within proton City is the universiti pendidikan Sultan Idris (upSI), which is currently under construction. phase 1 is expected to be completed by January 2011.

The Group also has interests in Mutiara Tropicana, a joint venture between HICOM Builders Sdn. Bhd. (HICOM Builders) and Majlis Agama Islam Selangor (MAIS). phase 1 has been successfully completed and we are now embarking on phase 2, comprising townhouses, in this development in Tropicana, Selangor. In addition, HICOM Builders has completed the renovation of several Bank Muamalat branches and an upgrade of DRB-HICOM Auto Solutions’ building in pekan. It is also completing a factory in the HICOM pegoh park in Melaka, while studies are being conducted on the residential and commercial components of this 730-acre freehold mixed development.

The Group’s presence in the construction industry is further strengthened via our 70% equity in Comtrac Sdn. Bhd. (Comtrac). while Comtrac was affected by the slowdown last year, it is confident of a quickened pace from 2010 onwards. focusing on turnkey projects on a fast track basis that provide high profit margins, it is targeting RM100 million worth of construction contracts in 2010/11, of which RM29 million will be derived from the development of Glenmarie Cove.

In the hospitality sector, the Group owns Holiday Inn Kuala lumpur Glenmarie in shah Alam, rebak island resort in langkawi and lake Kenyir resort and spa in Terengganu. Holiday Inn Kuala Lumpur Glenmarie caters primarily to the business traveller. Set in lush tropical greenery, overlooking two 18-hole world-class golf courses, it is just 30 minutes from Kuala lumpur


pROpERTy & INfRASTRuCTuRE SECTOR


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International Airport and 30 minutes from the heart of the city. The hotel proved resilient in 2009/10. while the Malaysian Association of Hotels reported average occupancy rates of 60.7% in 2009, the hotel’s occupancy rate increased to close at 64.8% for the period April 2009-March 2010. Other notable achievements in the year included certification by the Green Globe, which supports the Global Sustainable Tourism Criteria (GSTC) on the sustainable operation and management of travel and tourism businesses; and recognition awarded to Fu rin, the hotel’s Japanese restaurant, as one of malaysia’s best Japanese restaurants in 2009 by Malaysia Tatler.

Rebak Island Resort is a five-star, 82-room resort on a 385-acre island in the langkawi archipelago, managed by the Taj Group of India. The one-island-resort which boasts an international-class marina has been steadily attracting an increasing number of visitors. In 2009/10, its room occupancy increased from 31% to 56%, leading to a 56% increase in revenue from RM9.97 million to RM15.57 million.

In Terengganu, on the banks of the country’s largest lake, lies another gem of a resort, Lake Kenyir Resort and Spa. Spanning over 60-acre, and surrounded by the world’s oldest tropical rainforest, the resort is a haven for nature lovers who will be enthralled by the rich biodiversity to be discovered. Nine of the 10 hornbill species found in Malaysia can be spotted here. Activities include kayaking on the 260,000 hectare lake, cruising to some of the 340 lake islands, exploring caves, trekking to waterfalls, fishing and cycling in an unspoilt environment far removed from urban stresses. The management plans to collaborate with the Terengganu State Government and private investors to turn one of the lake islands – pulau Gawi – into a tourist attraction centre while developing activities such as team-building on another island, pulau popi.

following a RM4.4 million renovation, completed in early 2008, lake Kenyir resort and spa’s facilities are truly of international standards, and the management plans to market it more intensively, both locally and in foreign markets. It will also intensify the resort’s visibility through advertisements, its website, trade shows, and by hosting more familiarisation trips for travel writers and travel agents.

The Group’s property and infrastructure sector includes the management of property, such as The Verge and Chill@The Verge, in Singapore’s little India precinct. To increase its yield from the mall, the management is concentrating on attracting more patrons and retailers, and increasing the number of advertisements in the mall. At the same time, efforts are being made to reduce operating costs through measures that include better energy management.

“lake Kenyir resort and spa is a haven for nature lovers who will be enthralled by the rich biodiversity to be discovered. Nine of the 10 hornbill species found in Malaysia can be spotted here.”


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EIGHTY PERCENT OF THE UNITS LAUNCHED IN PRECINCT 2 OF THE RIVERFRONT LIFESTYLE RESORT GLENMARIE COVE HAVE BEEN COMPLETED AND ARE EXPECTED TO BE HANDED OVER BY THE END OF 2010. THIS 200-ACRE FREEHOLD, EXCLUSIVE ENCLAVE OFFERS SEMI-Ds AND BUNGALOW VILLAS BUILT AROUND LANDSCAPED BOARDWALKS, PARKLANDS AND LAGOONS.


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OUTLOOKAs an entrepreneurial Group, DRB-HICOM will be capitalising on a recovered economy by further growing and strengthening our core businesses while expanding into new areas that have the potential of creating synergies with our existing companies and business models. As part of our overall strategy to create a balance between the Automotive and Services Sectors, we will be looking actively to expand the latter.

within the Automotive Sector, we will seek to attract more credible marques to our growing stable, and to capitalise on the localisation programme to further develop our manufacturing arm. Already, industry indicators are showing healthy signs of growth. The total industry volume for motor vehicles for the first four months of 2010 increased 21% to 196,121 units compared to 162,075 units in the previous corresponding period.

It will also be a very exciting year for the property and Infrastructure Sector, which will release several launches that were held back in 2009/10, in addition to those planned for the year. Among the developments are some that promise to be icons within the local landscape, both in the Klang Valley and elsewhere.

The New Economic Model introduced by the Government in March 2010 was in many ways a bonus for the Group. By allowing for private sector investment in GlCs, it has created attractive possibilities for further growth. Indeed, there is huge potential for DRB-HICOM; and we embark on our onward journey full of optimism, confident in the knowledge that we will be guided throughout by our Vision – developed by our people – ‘to be number 1 and continuously excel in all that we do’.

VALUESI take personal interest in nurturing a corporate culture built on a foundation of integrity and honesty. It is my firm belief that a corporate organisation is only as good as its people, and the people as good as their values. It is based on this tenet that building the soft skills of our people is one of the primary objectives of our Company. At the same time that the senior management met to develop a Vision which resonates with our innermost beliefs, we also searched our value systems to come up with seven Shared Values we felt were crucial to the well-being and further development of the Group. These are: excellence, decorum, teamwork, integrity, innovation, quality and transparency. These

values represent the soul of DRB-HICOM. They guide our thoughts, actions and the way we engage with people around us, at work and outside.

These values are cascaded down to all employees, not merely through communication, but through actions and deeds. I take personal responsibility for living our Shared Values. I am pleased to say I am supported by my senior team, who walk the same talk by my side. we embrace every opportunity to reinforce these values to employees, for example at our Boot Camps, at the bimonthly ceramah, when I meet members of staff for ‘secawan teh’ and, sometimes, through memos. As part of our open and transparent culture, management committee and heads of division meetings are held every other week so that we keep abreast of developments at every level and in every segment of the Group.

Values cannot be quantified, yet the returns are priceless. They are seen in the trust and confidence given to the DRB-HICOM brand and Group by our stakeholders – business partners, associates, vendors, customers and others whose lives are touched by DRB-HICOM in one way or another.

HUMAN CAPITAL DEVELOPMENTDRB-HICOM truly values our employees, whom we consider our strongest asset. Hence, we are dedicated to their welfare and engage actively in two-way communication so as to hear their points of view, and respond to these. Staff engagement is integral to ensuring our warga DRB-HICOM feel they belong to the ‘family’. Strong two-way communication reinforces a sense of individual responsibility as well as responsibility to the Group. further, in an organisation represented by more than 23,000 employees, communication is key to ensure we all move towards the same goals as one.

Our commitment to our people is so great that no less than 30% of our corporate responsibility budget goes towards empowering them. we constantly enhance the skills and knowledge of our employees through training and development. This forms part of our overall agenda to support the nation in building a knowledge-based workforce to drive a knowledge economy. Towards this end, we have embarked on a talent management programme to grow our human capital organically by recognising high achievers who added value to the Group’s performance and business, and giving them the opportunity to further develop and realise their full potential through training and learning opportunities.

On a larger scheme, we have in place a structured development programme that nurtures an unbroken line of leaders who are crucial to succession planning. Talents at every level within the Group undergo continuous coaching and training so that they are ready to take on roles of greater responsibility.

The setting up of the International College of Automotive (ICAM) underlines our commitment to increasing the technical and theoretical skills and knowledge of automotive personnel. Indeed, it represents nothing less than a paradigm shift in automotive education as, for the first time, Malaysians are being given the opportunity to receive highly customised training that is industry relevant. This is DRB-HICOM’s commitment to safeguarding the future of our nation’s automotive industry while elevating it to a higher plane through the generation of well-qualified young blood infused with the right competencies and professionalism. The college stands to benefit not only DRB-HICOM but the nation as a whole as we will be open to anyone seeking quality automotive education. In fact, ICAM is set to enhance Malaysia’s reputation as an automotive hub as we have even received interest from potential students from China, Indonesia, the Middle East and Africa.

APPRECIATIONAlhamdulillah, having completed our 30th year with pleasing results, I would like to record my deep-felt appreciation to all those who have contributed to DRB-HICOM’s success story to date. first and foremost, I would like to acknowledge the board of directors, under the leadership of our Chairman, Dato’ Syed Mohamad Bin Syed Murtaza, who has guided us through two turbulent years and ensured we emerged all the stronger. My gratitude also goes to the management of DRB-HICOM and all our staff, who have been very supportive of the Group and have worked extremely hard, especially over the last two years, to keep our flag flying. Thanks are also due to all our vendors, suppliers and partners, from Malaysia and overseas, for their high level of professionalism and reliability. I would also like to acknowledge the continued support of the Government, and the trust and confidence of our shareholders.



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human capitaldevelopment

MAnAgEMEnt tRAInEE PROgRAMMEEvery year, under our Management Trainee Programme, DRB-HICOM recruits fresh graduates with cumulative grade point averages of above 3.2. These new recruits undergo a one-year training programme during which they have the opportunity to experience the different functions and operations in the Group. At the end of this programme, they are placed in an executive position and are given full support to advance themselves within the organisation. They are constantly tasked with assignments that require them to collaborate with colleagues from different functions. These projects increase with complexity over time, so as to always challenge the young executives and increase the depth and breadth of their knowledge and capabilities.

While we promote broad-based learning, we also acknowledge that employees perform best when they are given the opportunity to hone their natural skills. So as to pinpoint individual strengths and talents, key executives are required to go through an assessment which allows us to build on their innate abilities while also providing support to strengthen their weak points. Based on their profile, and on personal input from the employees, we help to develop a career path that they would find fulfilling.

DRB-HICOM is fully cognisant of the significant role our employees play in the Group in maintaining its leadership position. We therefore seek not only to create opportunities for all staff to enhance their knowledge and skills, but to positively encourage an ambitious mindset that drives our employees to continuously improve themselves so as to achieve all their personal and professional goals.

In a Group as diverse as ours, human capital development presents its own set of challenges. At the same time, this business diversity offers a unique learning proposition, affording staff exposure to a wide range of businesses that broadens their perspective and enriches their approach to handling work-related issues.


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CO-OwnERsHIP Of EMPlOyEE DEvElOPMEntGroup Human Resources (HR) believes in engendering a sense of inclusiveness and participative accountability by involving operating companies in the development of their human capital. The co-ownership of creating a healthy succession line is reflected in the KPIs of CEOs and their management teams, who are responsible for identifying those with the agility and ability to accelerate the pace of their career progression.

As we empower our employees, we nurture a culture of performance accountability where trust and stewardship are emphasised. Within this environment, it is essential to have good communication between personnel and senior management. Across the Group, senior management operate on an open-door policy, whereby any member of staff can walk into any manager’s office, including that of the CEO. The Group Managing Director himself has half-hour one-on-one sessions with individuals picked at random for ‘secawan teh’ (cup of tea). He also makes regular trips to operating companies outside of the Klang Valley, and uses this opportunity to dialogue with employees at all levels, from the shop floor to the CEO.

The average DRB-HICOM executive spends more than the Group’s target of 48 hours’ training a year. Training programmes are held for employees Group-wide at our Learning Centre in the DRB-HICOM headquarters in Glenmarie, as well as externally.

COMPAny-sPECIfIC tRAInIngOperating companies within the Group employ their own training programmes to cater to internal needs. Employees within the automotive sector are sent to the manufacturing plants of foreign strategic partners in Germany and Japan for training in vehicle assembly. In collaboration with our foreign partners, each employee spends up to four months in Japan to master their art of production and to assimilate the Kaizen (continuous improvement) culture. Employees sent to Germany undergo between two and four weeks of intense training with our European counterparts.


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human capital development (continued)

ICAM & ACADEMIEsIn March 2010, DRB-HICOM opened a new International College of Automotive (ICAM) in Pekan, Pahang, with the objective of equipping personnel from the automotive sector with relevant skills-based certification. ICAM currently offers three-year diploma programmes in Automotive Management Systems, Vehicle Assembly Management and Vehicle Inspection; and will be introducing more courses in time. All the courses emphasise financial and strategic management knowledge and skills.

The college has two intakes a year, and welcomed its first batch of 75 staff from DRB-HICOM shop floors this March. Now housed in a temporary site with a capacity of 1,300 students, ICAM’s permanent campus will be able to accommodate more than 3,000 students. By then, ICAM is expected to have acquired university college status, and will offer students – including non-DRB-HICOM employees – graduate and postgraduate degrees in addition to diplomas. ICAM supports the national agenda to upskill the general workforce, as

prescribed in the New Economic Model. It represents another chapter in our pursuit of corporate responsibility.

ICAM is owned by HICOM University College Sdn. Bhd. (HUCSB), incorporated on 28 January 2010, which will also oversee PUSPAKOM’s training academy and Akademi Saga, where school leavers can obtain vocational automotive training.

CAREER gROwtH fOR sEnIOR MAnAgERsGroup Human Resources identifies capabilities and skills that are required by key officers of the various operating units, through a business results inventory, and charts training programmes to develop these. Career growth is realised via lateral and vertical movements within the organisation, without any gender discrimination, thus maximising both quality and equality.

Cross-postings at the managerial level occur at least twice a year, and are part of differentiated initiatives to create a succession line of top managers. The rotational deployment of managers from one company within the Group to another challenges them to adapt to a new working environment with new parameters, new teams and perhaps even new business models, often resulting in a quantum increase in their management skills and strategic capabilities.

To further stimulate and motivate our top brass, DRB-HICOM organises sector-based quarterly dialogue sessions for senior management. These take the form of intense one-day brainstorming marathons at which there is open and candid exchange of ideas and experiences. In addition, at least once a year, senior management from across the entire Group get together for a similar power-exchange. To keep abreast of global trends relevant to business and management, international and local thought leaders are invited to speak to DRB-HICOM managers on a regular basis.


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To prepare senior management for leadership positions, they are given transitional coaching. Beginning in 2009, the Group engages an external transition coach to work closely with selected senior managers on an individual basis for a period of six months. In addition, senior managers are trained to themselves coach those who report to them. While this benefits their juniors, it also adds to the senior manager’s leadership skills.

ADDItIOnAl QuAlIfICAtIOnsOver and above the training provided by DRB-HICOM, the Group offers an education assistance programme, which supports employees who wish to further their academic qualifications at tertiary educational institutions in Malaysia up to the Master’s level. Those interested in pursuing degrees abroad are encouraged to do so under study leave.

As a result of these initiatives, DRB-HICOM has established itself as a preferred employer, attracting a high calibre of employees who add to the Group’s strengths and contribute immeasurably to its stated vision ‘To be Number 1 and continuously excel in all that we do’.


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DRB-HICOM has its foundations in CR, as one of the primary goals of HICOM was to boost the development of heavy industries in the country. While this objective has been achieved, we have never strayed from supporting the Government in its endeavours to further propel the country’s progress.

corporateresponsibilityis more than just corporate philanthropy

SUSTAINABILITY

Economic

Social

Environment

CR

CSR

The move towards sustainability involves balancing social, economic and environmental issues

CORPORATEPHILANTHROPY

group’s CR strategy reflecting its range of interest and presence.

CR

vis

ion

str

ateg

ic t

hem

esB

y C

R d

imen

sion

CR

P

ortf

olio

Community

• Nurture youth’sinterest in our specialised areas (e.g. Engineering)

• Address socialneeds of local communities

30-35%

Environment

• Embedenvironmental considerations in all aspects of operations

20-25%

Marketplace

• Encouragevendors to act sustainably (i.e. ethical/green procurement)

20-25%

workplace

• Focus on CRinitiatives that promote continuous learning and development at workplace

25-30%

“We are committed to being a responsible corporate citizen, especially in the development of communities in areas we operate in, because their future is our future”

In particular, we fully support the Government’s aspiration to nurture a skilled and knowledgeable workforce that is capable of catapulting the country into the knowledge economy. In so doing, we also offer Malaysians the hope of fulfilling their dreams of acquiring a better standard and quality of life.

Over the years, the Group developed a tradition of giving generously to organisations and communities that require funds and support in other forms. However, last year, the Board of Directors adopted a CR framework to transform our various acts of corporate philanthropy into a more formal and streamlined proposition that further enhances the Group’s sustainability by balancing our commitments to social, economic and environmental issues.

Today, corporate responsibility at DRB-HICOM is fully embedded in all our business activities and reflects our commitment to long-term shareholder value. It is part of our corporate philosophy and affects all

employees. In carrying out our CR initiatives, we actively engage our stakeholders and respond to their needs. In so doing, we make ourselves more accountable for our actions and operate with greater transparency. This allows us to achieve maximum impact in the local communities where we operate and in society on the whole.

We place equal emphasis on our social and environmental footprint as we do our financial performance, thus adopting a system of triple bottom line accounting, which serves the ultimate purpose of positively impacting society while achieving business success.

Our CR framework focuses on the four strategic dimensions of the Community, Marketplace, Workplace and Environment. Within this framework, we have set aside a budget and established systems for assessing, monitoring and reporting our CR initiatives as well as increasing stakeholder engagement.


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suPPORtIng nAtIOnAl AsPIRAtIOns tHROugH EDuCAtIOnOne theme that unites our community, marketplace and workplace CR initiatives is education. DRB-HICOM is keenly aware of the need to develop the nation’s human capital so as to remain competitive in a rapidly globalising world. This we do by providing training opportunities in the workplace and in the community, our actions serving both to enhance our position in the marketplace and to boost the local market’s global competitiveness.

The International College of Automotive (ICAM), opened in March 2010, best exemplif ies the Group’s commitment to supporting the Government’s vision of transiting the country into a knowledge-based economy. As the largest fully integrated automotive company in Malaysia, DRB-HICOM has been aware of a gap between industry needs and the quality of personnel entering the automotive sector. Recruits either have technical expertise but lack knowledge, or are knowledgeable but technically inept. ICAM will bridge this gap through carefully thought-out, holistic syllabi aimed at preparing graduates to contribute meaningfully to the automotive industry upon completion of their three-year diplomas.

Situated in Pekan, adjacent to the Group’s assembly plant, constant input from the industry will ensure the learning environment at ICAM remains demand-driven, hence relevant. At the same time, trainees will have access to the production lines of some of the world’s top car brands, greatly enhancing the value of their training.

Eventually, the college will offer Malaysians full-fledged, recognised degrees, further elevating the nation’s knowledge base and establishing Malaysia as a regional hub for the automotive industry. Inspired by the country’s quality workforce, a greater number of foreign manufacturers will be attracted to set up operations here.

ICAM has the unique distinction of being a training ground for the industry, by the industry. It powers the ambitions of our workplace, the community and the nation.

In line with our CR objectives, the Group also contributed RM50 million towards the establishment and development of the Albukhary International University (AIU) in Alor Setar, Kedah. AIU operates on the philosophy of assisting disadvantaged students around the world who possess potential and a desire to excel, but do not have the means to support themselves through higher education. AIU is fully funded by Yayasan Albukhary and students are fully sponsored by the university.

AIU complements ICAM by providing a potential stream of graduates to take on executive positions in DRB-HICOM’s non-automotive core businesses, namely Property & Infrastructure and Services. Through AIU, the Group also derives access to R&D facilities to further develop our existing businesses as well as to venture into emerging areas such as green technology and sustainable development. Meanwhile, the opportunity for students to take on study attachments and practical training at DRB-HICOM is beneficial to both parties.

At the school level, subsidiary Rangkai Positif Sdn. Bhd. last year adopted S K Serkat in Pontian, located near the Tanjung Bin Power Plant in Johor. Under the adoption programme, Rangkai Positif will support a number of the school’s activities – such as its sports day – while also organising UPSR workshops to help the Primary 6 students prepare for their examination. The school houses a number of children of Rangkai Positif staff.


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corporate responsibility (continued)

holy month of Ramadhan, Aidilfitri and Aidiladha, when we organise special events to bring cheer to hundreds of orphans and underprivileged children. While extending the spirit of sharing, the Group contributes cash (duit raya) as well as essentials to orphanages such as Rumah Sinar Harapan, Rumah Ehsan and Rumah Anak Kesayanganku, Bukit Beruntung.

Since 2004, Rebak Island Resort Langkawi has played host to the special needs children of Pusat Pemulihan Dalam Komuniti (PDK) for the breaking of fast during the month of Ramadhan. Last year, 51 children and youth from the home were invited to the resort on two occasions – for a Hari Raya open house and a high tea – when staff not only served them but also entertained the special guests with songs, dances and a tele-match game.

The Group has pledged RM150,000 over a period of five years to Yayasan Pembangunan Anak Yatim & Miskin, a fund set up to aid orphans and underprivileged children.

CR InItIAtIvEs In tHE COMMunItyIn the local communities where we have a presence, DRB-HICOM is committed to improving the lives of the underprivileged through various initiatives that include contributing towards hospitals and mosques.

In the year under review, DRB-HICOM Group contributed a total of RM10 million to Yayasan Albukhary to fund its dialysis centre, orphanage, tuition centre, old folks’ home and mosque at the Albukhary Complex in Alor Setar, in addition to supporting other charitable activities. We were honoured when our mosque in Proton City was chosen to host the two-day Maal Hijrah 1431H celebrations for the state of Perak, on 17 and 18 December 2009. The second day of this religious festival was graced by the Sultan and Raja MudaofPerak.Later, inFebruary2010,wedonatedavan to serve more than 200 communities in Kampung Bestari Jaya, Kuala Selangor.

The Group also has a tradition of lending a helping hand to charitable organisations, especially during the

Over the preceding year, we were deeply affected by the earthquake in Padang, Indonesia; and the suffering of Palestinians ravaged by war. We sent aid to both areas, channelling our funds to the Palestinians through the National Humanitarian Fund for Gaza.

Subsidiary MODENAS champions road safety and employs the close relationship it has established with the Road Safety Department to further this cause. The local motorcycle manufacturer takes in students from public and private colleges to learn safe/defensive riding techniques. During the year, 16 students completed a safety training programme here. In addition, MODENAS conducted safety programmes on: 1) the importance of wearing safety belts in cars; 2) the correct way of wearing helmets; 3) wearing safety vests, 4) training for the Emergency Response Team; and 5) convoy activities.


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CR InItIAtIvEs In tHE MARKEtPlACEAs a recognised industry leader, DRB-HICOM is aware of our responsibility towards meeting the high level of service and quality product offerings expected by our customers. Our operating companies are guided in their interactions with customers and sales prospects by a comprehensive Customer Relationship Management (CRM) Programme. CRM activities include annual golf friendly tournaments, fishing and bowling competitions. The Group further conducts various customer satisfaction surveys, which are seen as essential to the survival of our businesses.

DRB-HICOM is also proactively involved in developing and managing our vendors. We run a vendor development programme as we expect our vendors to meet certain standards. For high-volume purchases,vendors are assessed on parameters including their quality management and respect for the environment. Vendors undergo audits, and top performers are honoured with appreciation and performance awards. Each operating company runs its own development programme for Bumiputra vendors to strengthen their position in the sectors we operate in, namely components manufacturing, construction and automotive distribution (dealers and parts dealers).

At the same time, we recognise dealers who have excelled. Various dealer appreciation sessions as well as conventions are organised not only to create networking opportunities and to motivate the dealers, but also to reinforce DRB-HICOM’s values, goals and culture among them. Besides reviewing their performance, dealers are encouraged to align themselves with DRB-HICOM by embracing and upholding the Group’s vision and mission. Edaran Otomobil Nasional Berhad (EON), for example, held a Parts Dealers Appreciation session, themed Moving

Forward with EON, to further strengthen its relationship with its extensive after-sales network of parts dealers and franchised service centres. The event also served as a platform for EON to share its business plan and future strategy with its partners.

As a result of the Group’s commitment to corporate excellence, operating companies within the DRB-HICOM fold have received numerous awards. In the last year itself, PHN Industry Sdn. Bhd. (PHN), one of DRB-HICOM’s component manufacturing companies, received a Certificate of Excellence from the Ministry of International Trade and Industry for being Top 5 in Quality Management Excellence. PHN also was named Honda Supplier of the Year and received the Best Quality Award from Toyota Boshuku UMW Sdn. Bhd.

In the world of finance, we promote sound Islamic principles through Bank Muamalat Malaysia Berhad (BMMB), which has always been vigorous in promoting and educating the public on the benefits of Islamic banking. In this past year, this was achieved through regular ceramah (meetings) and talks at selected mosques and various institutions throughout the country. In addition to the series of talks, BMMB also provided special text on the subject of Riba’ (interest) that was read by the Imam during the Fridaycongregational prayers in several states.

During the month of Ramadhan, BMMB aired on television a popular and well received short daily programme by our very own Ustaz Mohd Hafiz, Head of Shariah Department, explaining various verses in the Quran pertaining to business and interest. In addition, the Bank sponsored the popular Bersamamu and Forum Perdana television programmes as part of its public awareness initiatives.

We strive continuously to raise our standards of corporate governance to ensure stakeholders’ expectations are met. DRB-HICOM BERHAD

annual report 2010

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CR InItIAtIvEs fOR tHE EnvIROnMEntDRB-HICOM believes that caring for the environment entails a commitment to making continuous efforts to conserve the world around us. In our quest for a clean and healthy environment, we have instituted an awareness programme – via email and memos – for all employees to reduce wastage and electr ici ty consumption. This not only serves our green agenda but also complements our cost-reduction initiatives. We invite feedback to improve on our programme and constantly monitor progress made.

Employees are encouraged to participate in a 3R programme to reduce, reuse and recycle. Paper consumption has been reduced through the use of recycled paper – for example printing internal memos and documents on the blank side of used paper – and duplex printing. Waste paper is segregated for recycling by having separate bins in offices. Recyclable material is collected at the end of every month and incentives are given at the department level for collecting recyclables.


In accordance with ISO 14001 guidelines, we measure our energy consumption on a yearly basis and implement electricity-saving measures such as switching off lights and office equipment when they are not in use.

At the Group’s industrial plants, the use of cotton and leather gloves has been reduced via strict controls on distribution on an exchange basis only. All used packaging items (cardboard, carton boxes, plastic, wooden pallets, metal frames and paper) are collected and sold to recycling contractors. Transport is optimised to maximise the number of deliveries per trip per day. Electricity usage, meanwhile, has been reduced by fixing air leaks from machines, changing to energy-saving fluorescent lights, installing transparent roofs and walls to let in natural light, and reducing forklift operating hours.


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SubsidiaryAlamFlora, thewastemanagement servicesprovider, takes a leading role in environmental protection, extensively promoting the 3R programme in schools and the community. Awareness programmes have also been carried out via exhibitions. From thefinancial year 2006/07 to date, Alam Flora hasimplemented 237 3R programmes.

Internally, Alam Flora has embarked on an AutomatedVehicle Location System (AVLS) to reduce its diesel consumption. As from financial year 2007/08 to date, its vehicular CO2 emission has dropped by 1,058 tonnes. A FloraGreen committee has been establishedto advocate a green lifestyle via a green policy, weekly green tips, tree planting and green hunt activities. The FloraGreen committee is responsible for inculcatingenvironment-friendly habits among all employees.

AlamFloraisalsocollaboratingwithforeignorganisationsto process organic waste into bio-fertilisers; develop a (plastic) waste-to-diesel plant; and to convert landfill gas to energy.

To enhance its corporate identity as a leading environment management company in Malaysia, Alam FloracollaboratedwithBulletinUtamaTV3tobroadcastits efforts in serving the community via two-minute snippets aired every Tuesday for 10 weeks from 6 October 2009.

On 25 November 2009, Alam Flora bagged the PrimeMinister’s Hibiscus Award for its Notable Achievement in Environmental Performance.

The very nature of PUSPAKOM’s operations means it, too, contributes to a cleaner and healthier environment. PUSPAKOM’s computerised vehicle inspection systems, available at 60 branches with a capacity to inspect a total of 4 million vehicles per annum, minimises pollution from cars, trucks and buses. PUSPAKOM gauges the density of particles in diesel engine emissions through free acceleration tests; while the volumes of hydrocarbon and carbon monoxide gases in petrol engines are measured using an idling test.

In addition, individual operating companies within the Group also take on the role as ‘eco ambassadors’. Associate company Honda Malaysia has committed RM5million to a five-year project byWWF-Malaysia toprotect the Sumatran rhino. At Lake Kenyir Resort & Spa, meanwhile, the focus is on creating greater awareness of the hornbill. The resort collaborates with the Terengganu State Government and Malaysian Nature Society to distribute brochures on the magnificent bird. At the resort itself, there is a hornbill corner where all hornbills, raptors and forest birds are displayed. The resort also runs a Bird Watching Programme that enables guests to observe the birds in Sg. Buweh.

The Group has set the goal of providing innovative solutions to environmental challenges. All company sites will have clear environmental targets and their performance will be monitored regularly. Meanwhile, subsidiaries will strive to raise their environmental performance standards even if it means going beyond the requirements of local legislation, so that we can make a positive contribution to a green world.

In our quest for a clean and healthy environment, we have instituted an awareness programme – for all employees to reduce wastage and electricity consumption.


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DRB-HICOM values our employees highly and strives to offer them a stimulating work environment where they are motivated to reach their full potential.


CR InItIAtIvEs In tHE wORKPlACEDRB-HICOM values our employees highly and strives to offer them a stimulating work environment where they are motivated to reach their full potential.

As one of the leading conglomerates in the country, staff development is a priority, and there is strong emphasis on continuous learning. Employees are given various incentives to pursue educational qualifications that will improve their career prospects in the company. We have instituted a succession and development process that ensures a continuous flow of future leaders across the Group. This serves the double objectives of catering to the career aspirations of our employees, as well as fulfilling DRB-HICOM’s future business needs. In addition, employees are encouraged to join professional associations, with the Group subsidising their memberships.

DRB-HICOM places equal emphasis on the well-being of our employees, as we believe the higher the level of satisfaction in the work space, the greater the productivity. Various events and activities are organised to engender a feeling of belonging to the Group. These include the bi-annual DRB-HICOM Team Boot Camp where employees are exposed to physical challenges which encourage teamwork and strategic thinking. This highly motivational experiential learning has proven to be very popular among all levels of employees and has become a highlight on our corporate calendar.


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Kelab Sukan DRB-HICOM (KSDH), the in-house sports club, is tasked with organising employee engagement activities at the Company and Group levels which involve our staff’s families. Activities this year included the DRB-HICOM Family Day and Treasure Hunt atTiara Beach Resort, Port Dickson; Majlis Jamuan Hari Raya; Intra-Club Games (ICG); a Staff Children Education Visit to the Proton Plant in Tanjung Malim; and a Workshop on English Enhancement for Staff Children. KSDH also hosts the Annual Dinner, at which we present employee appreciation awards to recognise the support and commitment shown by all staff, and especially those who have gone the extra mile.

Meanwhile, individual operating companies within the Group organise their own activities, such as the gotong-royong to spruce up the workplace, which also reinforce the spirit of togetherness.

Safety is of paramount importance, and the Group is committed to safeguarding the health and safety of our employees. This is reflected in Occupational Health and Safety Assessments (OHSAS), and our ISO 14001 EMS certification. All our offices and factories have been declared smoke-free zones, while most of the factories have adopted a ‘towards zero-accident’ policy. Our focus on health was demonstrated recently by the Group-wide implementation of stringent thermal screening to prevent H1N1 infection. This resulted in zero infection.

As a caring employer, DRB-HICOM has a Staff Welfare Fundwhich provides financial assistance to employeesin need, for example those who have been affected by natural disasters such as floods and fire.

Additionally, the Group provides scholarships to children of staff who have proven themselves in the national examinations. This year, 149 top scorers in the PMR, SPM and STPM examinations received a total of RM61,150 as aid to further their education. Each student also received RM100 from Bank Muamalat Malaysia Bhd.

To ensure we continue to meet our objective of satisfying the aspirations and needs of our employees, the Group conducts employee satisfaction surveys every year. These indicate a positive perception and attitude towards DRB-HICOM. Employees are proud to be in DRB-HICOM, believe in our Vision, Mission and Values, and are confident of the company’s image and business performance. What is more, they recognise and support the company’s Corporate Responsibility initiatives.

We believe our emphasis on CR positions the Group as a preferred business partner and a preferred employer, creating win-win situations between us and all our stakeholders.


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corporate governance (continued)

corporate

governance93STATEMENT ON CORpORATE GOVERNANCE

105DIRECTORS’ STATEMENT ON INTERNAl CONTROl

114ADDITIONAl COMplIANCE INfORMATION

109AuDIT COMMITTEE REpORT 117

STATEMENT Of DIRECTORS’ RESpONSIBIlITy


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corPorAte GoVernAnce sets out tHe FrAmeWorK AnD Process By WHicH comPAnies, THROuGH THEIR BOARD Of DIRECTORS AND MANAGEMENT, REGulATE THEIR BuSINESS ACTIVITIES. IT BAlANCES SOuND AND SAfE BuSINESS OpERATIONS wITH COMplIANCE Of THE RElEVANT lAwS AND REGulATIONS. GOOD CORpORATE GOVERNANCE IS GlOBAlly ACCEpTED AS BEING fuNDAMENTAl TO AN ORGANISATION’S COMpETITIVENESS, GROwTH AND SuSTAINABIlITy.

statement oncorporate governance

appointing and fixing the remuneration of and, where appropriate, replacing senior management. The Board is also responsible for identifying principal risks and ensuring the implementation of appropriate systems to manage these risks; developing and implementing an investor relations programme; and reviewing the adequacy and integrity of the Group’s system of internal controls.

To ensure the achievement of the Group’s overall strategic direction and AmP, yearly KPis have been formulated for the Group managing Director and these KPis are cascaded down to the respective chief Executive Officers/Chief Operating Officers and other Management team members of the Group.

In addition, to ensure an optimum structure for efficient decision-making, the Boards of the Company and all Group Companies, approved a framework on limits of Authority (“lOA”). Such lOA expressly set out the matters which are reserved for Board approval, as well as matters which the Board may delegate to Board Committees, the Group Managing Director and Management. The Management’s responsibilities and authorities are defined in the lOA. The lOA is reviewed as and when required.

1.2 Composition and Balance The current Board has eight (8) members, comprising one (1) Executive

Director and seven (7) Non-Executive Directors (including the Chairman) of whom five (5) are independent as defined by the Bursa Securities Main Market listing Requirements (“Bursa Securities listing Requirements”). Hence, the Board more than fulfils the prescribed requirements for one-third of the membership of the Board to be Independent Board Members.

The Board of Directors of DRB-HICOM is committed to ensuring that the highest standards of Corporate Governance are practised throughout the Group as a fundamental part of its responsibilities in managing the business and affairs of the Group and protecting and enhancing shareholders’ value and financial performance. To continuously achieve the higher standards of Corporate Governance, the Board ensures that new facts and evolving corporate governance issues are addressed and best practices are incorporated in the Group.

The Board is pleased to set out below the manner in which the Company has applied the principles set out in the Malaysian Code on Corporate Governance (Revised 2007) (“the Code”) and the extent to which the Company has complied in all material respects with the best practices of the Code as well as international best practices during the financial year ended 31 March 2010.

1. BOARD OF DIRECTORS1.1 Duties and Responsibilities of the Board The Board has the overall responsibility in leading and determining the

Group’s overall strategic direction as well as development and control of the Group. The Board approves the Group’s Annual Management plan (“AMp”) and the overall strategic direction on a yearly basis. The Management presents to the Board the overall strategy and future direction for the ensuing year for its approval. The process also includes the Board’s review and approval of the AMp and the corporate key performance indicators (“KPis”) which are used by the Board for tracking the Company’s performance against the targets. The Board retains full and effective control of the Group by reviewing Management’s performance against the AMp periodically and ensures that the necessary financial and human resources are available to meet the Group’s objectives. The Board is responsible for succession planning, including


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statement on corporate governance (continued)

there is a balance of power and authority. The Chairman is responsible for ensuring Board effectiveness and conduct. He encourages a healthy debate on issues raised at meetings, and gives opportunity to Directors who wish to speak on the motions, either for or against them. The Group Managing Director has overall responsibility for the management of the operating units, organisational effectiveness and the implementation of Board policies, decisions and strategies.

1.4 Appointments and Training There is a formal and transparent procedure for the appointment of new

Directors to the Company and the Group, with the NRC evaluating and making recommendations to the respective Boards. following the appointment of new Directors to the Board, the NRC will ensure that an induction programme is arranged, including visits to the Group’s significant businesses and meetings with senior management as appropriate, to enable them to get a full understanding of the nature of the businesses, current issues within the Group and corporate strategies as well as the structure and management of the Group.

All existing Directors have completed the Mandatory Accreditation programme and are also encouraged to attend continuous education programmes and seminars to keep abreast of latest developments in the marketplace and to further enhance their business acumen and professionalism in discharging their duties to the Group. The Directors may also request to attend additional training courses according to their individual needs as a Director or member of Board Committees on which they serve.

The Company Secretary keeps a complete record of the training received and attended by the Directors. Seminars, conferences and training programmes attended by Directors during the financial year ended 31 March 2010 include the following:-

i. Dato’ Syed Mohamad bin Syed Murtaza

• Briefing by Pricewaterhousecoopers (“PWc”) on corporate Responsibility framework

• code of corporate Governance and ethical conduct

• An insight session into the economy with Professor Danny Quah

• small engine technology conference 2009

• micPA-Bursa malaysia Business Forum 2009

• Briefing by PWc on Frs 139 and 7

• Powered two Wheeler seminar

The Nomination and Remuneration Committee (“NRC”), pursuant to its recent annual review, is satisfied that the size and composition of the Board is appropriate and well balanced to fairly reflect the interests of major and minority shareholders. The NRC is also satisfied that all members of the Board are suitably qualified in view of their respective qualifications and experience which provide the Board with a good mix of industry-specific knowledge and broad business sense and commercial experience. This balance enables the Board to provide clear and effective leadership to the Group and bring information and independent judgement to many aspects of the Group’s strategy and performance so as to ensure that the highest standards of professionalism, conduct, transparency and integrity are maintained by the Group.

The five (5) Independent Directors in effect represent the interest of minority shareholders of the Company by virtue of their roles and responsibilities as Independent Directors. They play an important and pivotal role in corporate accountability, which is reflected by their memberships of and attendances at the various Board Committees. None of the Independent Directors participate in the daily management of the Group to ensure that they are free from any relationship which could interfere with the exercise of independent judgement in the best interests of the Company and of the minority shareholders.

The Independent Non-Executive Chairman, Dato’ Syed Mohamad bin Syed Murtaza, is the Company’s Senior Independent Non-Executive Director responsible for providing clarifications to the shareholders at the Company’s general meetings.

The Directors are well experienced in their respective fields and together provide an effective blend of entrepreneurship, business and professional expertise. A brief profile of each Director is presented on pages 34 to 41. No individual or group of individuals dominates the Board’s decision-making as the Independent Directors play an important role in providing independent views and opinions by objectively participating in the proceedings and decision-making process of the Board. The Board discharges its duties effectively and takes into account the interests of all stakeholders.

1.3 Roles and Responsibilities of the Chairman and the Group Managing Director

the chairman who was appointed on 1 July 2009, has not held any executive capacity in the Group and is unrelated to the Group Managing Director. The roles of the Independent Non-Executive Chairman and the Group Managing Director are distinct and separate so as to ensure that


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vi. Ong Ie Cheong

• Briefing by PWc on corporate responsibility Framework


• Board effect iveness: understanding the roles and Responsibilities of the Nomination and Remuneration Committees

vii. Tan Sri Marzuki bin Mohd Noor



• improving risk committee Performance

viii. Ooi Teik Huat

• High level Forum for Directors of listed issuers in enhancing Corporate Governance



• Forum on Frs 139 Financial instruments: recognition and Measurement

• Board excellence Forum


• Forum on Frs 139 Financial instruments standard by Deloitte Kassim chan

Apart from attending various conferences, seminars and training programmes organised by external/internal organisers during the financial year, the Directors also visited key operating units of the Group and continuously received briefings and updates on regulatory, industry and legal developments, including information on the Group’s businesses and operations, risk management activities and other initiatives undertaken by Management.

1.5 Board Effectiveness The Board, through its delegation to the NRC, had implemented the

process for an annual effectiveness assessment of the Board of Directors, Board Committees and the contribution of each Director to the effectiveness of the Board. The objective is to improve the Board’s effectiveness by identifying gaps, maximising strengths and addressing weaknesses.

ii. Dato’ sri Haji mohd Khamil bin Jamil



• corporate Warrior Programme


iii. Dato’ Noorrizan binti Shafie


• managing Profitability During An economic Downturn: What Directors need to Know




iv. Dato’ Ibrahim bin Taib



• Directors’ Duties and Governance conference 2010 “towards Boardroom Excellence and Corporate Governance Best practices”.

v. Datuk Haji Abdul Rahman bin Mohd Ramli


• Forensic seminar uncovering the Past, Protecting the Future

• managing Profitability During An economic Downturn: What Directors need to Know


• overview of the new securities commission and Bursa Securities framework and Deregulation of foreign Investment Committee

• Forum on Frs 139 Financial instruments: recognition and Measurement




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The Company had put in place appropriate controls to ensure the systematic identification of potential conflicts of interest and procedures between the Directors and the operation of the Group so as to manage such conflict of interest if arises.

The Directors are also informed of the closed periods periodically in accordance with the relevant provisions of Bursa Securities listing Requirements. The purpose is to remind the Directors not to deal in securities of the Company as long as they are in possession of price-sensitive information.

1.8 Board Meetings and Supply of Information to the Board To ensure that the Group is managed effectively, the Board meetings for

the ensuing financial year are scheduled in advance before the end of each calendar year so as to enable the Directors to plan ahead and fit the year’s Board meetings into their own schedules.

The Board meets at least once every quarter and additional meetings are convened between the scheduled meetings as Special Board Meetings as and when necessary to consider matters or business issues that require decision by the Board. To assist the Board in effective control of the Group, the Board meetings are governed by a structured formal agenda and schedule of matters arising for approval or notation with sufficient time given for deliberations. The key matters reserved for approval by the Board are the Group’s strategies and AMp, quarterly financial results, audited financial statements, significant expenditures, significant acquisitions and disposals, appointment of Directors/Board Committee members, remuneration for Directors (excluding fees), declaration of interim dividends, related party transactions, major restructuring and such other relevant matters affecting the Group’s operations. The Directors are supplied in a timely manner with information in a form and of a quality as appropriate for their perusal in advance of the date of the Board meeting. In addition to financial information, other information deemed suitable such as risk management updates, customer satisfaction, product and service quality, market share and market trends, manpower and human resource and environmental issues are also provided.

prior to Board Meetings, all Directors will receive the agenda and a set of Board papers containing information relevant to the matters to be deliberated at the meetings.

This is to accord sufficient time for the Directors to review the Board papers and if required, seek clarification and explanation from the Management or the Company Secretary. At the Board meeting, the

The Chairman of the NRC oversees the overall evaluation process whereby self-assessment methodologies are used and issues for assessment are presented in customised questionnaires.

1.6 Reappointment and Re-Election of Board members pursuant to Section 129 (2) of the Companies Act, 1965, Directors who

are over the age of seventy (70) years shall retire at every annual general meeting and may offer themselves for reappointment to hold office until the next annual general meeting.

In accordance with the Company’s Articles of Association, any new Director so appointed should hold office only until the next annual general meeting and should then be eligible for re-election. The Articles also provide that all Directors shall retire from office by rotation once every three years but shall be eligible for re-election.

The NRC reviews and assesses annually the proposed reappointment and re-election of existing Directors who are seeking reappointment and re-election at the annual general meeting of the Company. The NRC will, upon its review and assessment, submit its recommendation on the proposed reappointment and re-election of Directors to the Board for approval, before tabling such proposals to the shareholders at the annual general meeting.

The reappointment and re-election of Directors provide shareholders an opportunity to reassess the composition of the Board.

1.7 Conflicts of Interest The Directors continue to observe the Company Directors’ Code of

Ethics established by the Companies Commission of Malaysia in carrying out their fiduciary duties and responsibilities. This is to ensure that high ethical standards are upheld, and that the interests of stakeholders are always taken into consideration. The Directors are required to declare their direct and indirect interests in the Company and related companies. It is also the Directors’ responsibility to declare to the Board whether they and any person(s) connected to them have any potential or actual conflict of interest in any transaction or in any contract or proposed contract with the Company or any of its related companies. Any Director who has an interest in any related party transaction shall abstain from Board deliberation and voting and shall ensure that he and any person(s) connected to him will also abstain from voting on the resolution before them.


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1.9 Board Committees To ensure the effective discharge of its fiduciary duties, the Board has

delegated specific responsibilities to the respective Committees of the Board. The functions and terms of reference of Board Committees, as well as the levels of authority delegated by the Board to these Committees, are clearly set out by the Board. In addition, from time to time the Board reviews the functions and terms of reference of Board Committees to ensure that they are relevant and updated in line with the latest provision of the Code of Corporate Governance and other related policy or regulatory requirements.

The Chairman of the respective Board Committees reports to the Board, the outcome of Board Committee meetings and the Board also reviews the minutes of the Board Committee Meetings. The Board retains full responsibility for the direction and control of the Group.

To be consistent with best practices in Corporate Governance, the Board on 26 November 2009 approved the following:-

a) Revised the composition of the Audit Committee to comprise only Independent Non-Executive Directors;

b) Established a Board Risk Committee which comprised only Independent Non-Executive Directors; and

c) Merged the Nomination and Remuneration Committees into one Committee named as “Nomination and Remuneration Committee” in view that majority members of the two committees are common members. The merged committee comprises only Independent Non-Executive Directors.

The current Board Committees in the Company are as follows:-

i. Audit Committee The Audit Committee comprises the following Independent Non-

Executive Directors:-

a) Datuk Haji Abdul Rahman bin Mohd Ramli (Chairman)

b) Tan Sri Marzuki bin Mohd Noor

c) Ong Ie Cheong

d) Ooi Teik Huat

The Audit Committee meets not less than four (4) times a year. The details of meetings attended, terms of reference and functions of the Audit Committee are described in the Audit Committee report set out on pages 109 to 113.

Chairman encourages the Board members to have constructive, open and healthy debate to ensure that decisions are made after effective discussions by the Directors.

All Directors, whether independent or otherwise, have direct and unrestricted access to Management and may seek professional advice at the Group’s expense, if required. professional advisers, consultants, auditors and solicitors appointed by the Company to advise on corporate proposals to be undertaken by the Company, are invited to attend Board meetings to render their advice and opinion, and also to clarify any issues raised by the Directors relating to any relevant business tabled for the Board’s consideration.

All Directors also have access to the advice and services of the Company Secretary whose appointment and removal is a matter for the Board as a whole. The Company Secretary attends all Board and Board Committee meetings and ensures that there is a quorum for all the meetings. She is also responsible for ensuring that all the meetings are convened in accordance with the Board procedures and relevant terms of references.

The minutes of the meetings are prepared to include amongst others, pertinent issues, substance of enquires and responses, recommendations and decisions made by the Directors. The minutes of the meetings are properly kept in line with the relevant statutory requirements by the Companies Act, 1965.

The Board met a total of eight (8) times and all the Directors attended more than half of the meetings held during the financial year in compliance with Bursa Securities listing Requirements. Details of the attendances of Directors at the Board Meetings are disclosed below:-

Meetings attended during financial year

Dato’ Syed Mohamad bin Syed Murtaza 8/8

Dato’ sri Haji mohd Khamil bin Jamil 7/8

Dato’ Noorrizan binti Shafie 7/8

Dato’ Ibrahim bin Taib 7/8

Datuk Haji Abdul Rahman bin Mohd Ramli 7/8

Tan Sri Marzuki bin Mohd Noor 7/8

Ong Ie Cheong 7/8

Ooi Teik Huat 8/8


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• to establish and recommend the remuneration structure and policy for Executive Directors and senior management of grade 11 and above (Group Director and above); the terms of employment or contract of employment/service and any compensation payable on the termination of the service contract by the Company and/or the Group and to review for changes to the policy, as necessary;

• to ensure that a strong link is maintained between the level of remuneration and individual performance against agreed KPis with the performance-related elements of remuneration forming a significant proportion of the total remuneration package of Executive Directors and senior management;

• to review and recommend the entire individual remuneration packages for each of the Executive Directors and senior management personnel of grade 11 and above including, where appropriate, bonuses and increments;

• to review with the Group managing Director and the executive Directors, their goals and objectives and to assess their performance against these objectives as well as their contribution to the corporate strategy;

• to advise on any major changes in employee benefits structure throughout the Company or Group;

• to review and recommend to the Board any employees’ share option scheme; and

• to consider other matters as referred to the committee by the Board.

No meeting was held by the new NRC since its merger on 26 November 2009 to 31 March 2010.

ii. Nomination and Remuneration Committee The new Nomination and Remuneration Committee (“NRC”)

comprises the following Independent Non-Executive Directors:-

a) Dato’ Syed Mohamad bin Syed Murtaza (Chairman)

b) Tan Sri Marzuki bin Mohd Noor

c) Ong Ie Cheong

The NRC meets at least once a year, and is responsible:-

• to consider, evaluate and recommend to the Board any new Board appointments of the Group;

• to recommend to the Board, Directors to fill the seats on Board Committees;

• to review annually and recommend to the Board with regard to the structure, size, balance and composition of the Board and Committees including the required mix of skills and experience, core competencies which Non-Executive Directors should bring to the Board and other qualities to function effectively and efficiently;

• to evaluate on an annual basis, the effectiveness of the Board as a whole, the Board Committees and each Director’s ability to contribute to the effectiveness of the Board and the relevant Board Committees;

• to recommend to the Board whether Directors who are retiring should be put forward for re-election/reappointment at annual general meetings;

• to ensure an appropriate framework and plan for Board and management succession in the Group;

• to provide adequate training and orientation to new Directors as well as continuous training for all Directors during the year;

• to review management’s recommendation on appointment or promotion of senior management personnel of grade 11 and above (Group Director and above);

• to review and ensure that the policy on Directors’ fees for the Company are reflective of the contribution of each individual Director;


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Meeting attended Remuneration Committee during financial year

a) Dato’ Syed Mohamad bin Syed Murtaza (Chairman) 1/1

b) Datuk Haji Abdul Rahman bin Mohd Ramli 1/1

c) Ong Ie Cheong 1/1

Activities undertaken by the previous Remuneration Committee during the financial year ended 31 March 2010 were as follows:-

• recommended for approval the increment and bonus payment of the Group Managing Director and senior management personnel of the Group;

• reviewed and approved the annual increment and bonus for the financial year ended 31 March 2009;

• evaluated the KPis and Performance Bonus contracts (“PBcs”) for the Group Managing Director and senior management personnel of the Group for the financial year ended 31 March 2009; and

• established the KPis and PBcs for the Group managing Director and senior management personnel for the financial year ended 31 March 2010.

iii. Risk Committee The new Risk Committee (“RC”) comprises the following

Independent Non-Executive Directors:-

a) Tan Sri Marzuki bin Mohd Noor (Chairman)

b) Datuk Haji Abdul Rahman bin Mohd Ramli

c) Ooi Teik Huat

The RC meets at least twice a year, and is responsible:-

• to ensure that the strategic context of the risk management strategy is complete and takes into account the environment within which the group operates and the requirements of all stakeholders and the Board of Directors;

prior to the merger, the previous Nomination Committee and Remuneration Committee comprised the following members:-

Meetings attended Nomination Committee during financial year

a) Dato’ Syed Mohamad bin Syed Murtaza (Chairman) 2/2

b) Datuk Haji Abdul Rahman bin Mohd Ramli 2/2

c) Dato’ Ibrahim bin Taib 1/2

Activities undertaken by the previous Nomination Committee during the financial year ended 31 March 2010 were as follows:-

• conducted the assessment on the effectiveness of the Board as a whole, the Board Committees and each Director’s contribution to the effectiveness of the Board and the relevant Board Committees;

• recommended to the Board the revision and the appointment of Directors to the Board Committees;

• reviewed the training programmes attended by the Directors to ensure all Directors received appropriate continuous training;

• reviewed the structure, size, balance and composition of the Board and its committees;

• evaluated and recommended the nomination of Directors to the Boards of subsidiary and associated companies of the Group;

• considered and recommended the Directors standing for re-election and reappointment to be tabled at Annual General Meeting; and

• reviewed the management’s recommendation on appointment and promotion of senior management personnel of the Group.


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Management has also established a Group Risk Management Committee (“Group RMC”), to assist the RC in identifying principal risks affecting the Group and to ensure that appropriate systems are in place to mitigate such risks so as to safeguard shareholders’ investments and group assets. The Group RMC is chaired by the Group Managing Director and comprises representatives from the respective divisions.

On 26 November 2009, the Company established an RC in addition to the existing Group RMC, headed by the Group Managing Director. The objective is to provide oversight function to the risk management of the Group.

The Board through the RC oversees the risk management activities of the Group. The Group RMC formulates relevant proposals on risk management policies and risk measurement parameters across the Group and makes appropriate recommendations to the Board for its approval upon endorsement by the RC. The RC is responsible for ensuring that the risk management framework in the Group operates effectively based on the policies approved by the Board. The Group RMC reviews and presents the identified risks to the RC before submission to the Board on the key risks and action plans to mitigate the risks.

1.11 Directors’ Remuneration The objectives of the Group’s policy on Directors’ remuneration is

to ensure that the Group attracts and retains Directors of the calibre and integrity to run the Group successfully. In the case of executive directors, remunerations are structured so as to link rewards to corporate and individual KPis. in the case of non-Executive Directors (“NEDs”), the level of remuneration reflects the experience and level of responsibilities undertaken by the particular NEDs concerned.

The NRC is responsible for setting the policy framework and for making recommendations to the Board on all elements of the remuneration and other terms of employment of the Executive Directors and senior management.

The Executive Directors abstain from deliberation and voting on decisions in respect of their own remuneration. The remuneration (excluding fees) of NEDs is to be decided by the Board as a whole.

• to ensure that a short and long term risk management strategy, framework and methodology have been implemented and consistently applied by all Companies/Divisions;

• to determine the overall risk management processes that should be adopted by the Companies/Divisions and overseeing the development of appropriate guidelines and policies for implementation;

• to ensure that the risk management processes are integrated into all core business processes and that the culture of the organisation reflects the risk consciousness of the Board;

• to provide a consolidated risk and assurance reporting to the Board of Directors to support the statement relating to internal controls in the Company’s annual report;

• to ensure alignment and coordination of risk and assurance activities across the organisation;

• to identify opportunities to release potential business benefits through the enhancement of risk management capabilities;

• to facilitate and review the development and implementation of improvements to simplify and enhance the effectiveness of the existing risk management system;

• to ensure effective assessment and monitoring of mitigating controls implemented to reduce the impact and likelihood of occurrence of identified risks; and

• to support the implementation of the risk management processes within the business units across subsidiaries and associate companies of DRB-HICOM.

1.10 Other Committees In relation to matters pertaining to the management and

performance of the Group and its business including the operational aspects and strategic development of the Group, the Board has delegated certain responsibilities to the Group Managing Director, who is supported by a Management Committee (“MANCO”). The MANCO, comprising the Group Managing Director as Chairman, the Group Chief financial Officer and certain key senior management members, is responsible for formulating Company and Group policies for recommendation to the Board for consideration and implementing key policy decisions of the Board. The minutes of the MANCO are submitted to the Board for notation.


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The disclosure of Directors’ remuneration is made in accordance with Appendix 9C, part A, Item 11 of the Bursa Securities listing Requirements. The Code recommends disclosure of details of the remuneration of each Director. However, the Board is of the view that the disclosure of the remuneration of its Directors by bands is sufficient to meet the objective of the Code.

a) Directors’ Fees In 2006, the Company obtained a shareholders’ approval via an

ordinary resolution for the payment of Company’s Directors fees not exceeding RM800,000 for each financial year effective 31 March 2006 onwards based on the recommendation of the Board. Hence, yearly payment of fees to the NEDs of the Company does not need shareholders’ approval provided that the amount does not exceed RM800,000 per annum.

b) Meeting Allowances All NEDs are paid the following meeting allowances as determined

by the Board to reimburse them for expenses incurred for attendance at Board/Board Committee meetings and shareholders’ meetings, which is inclusive of travelling and accommodation:-

Allowance per Meeting Type of Meeting RM

Board 1,000 Audit Committee 2,500 Other Board Committees 1,000 General Meeting 1,000

c) Remuneration of Group Managing Director The basic salary inclusive of statutory employer contributions to

the Employees provident fund for the Group Managing Director is determined by the Board, taking into account the performance of the individual, the consumer price index and information from independent sources on the rates of salary for similar positions in a selected group of comparable companies. Salary is reviewed annually by the NRC. The Group Managing Director abstained from deliberation of his remuneration at the Board meeting.

Details of Directors’ remuneration for the financial year ended 31 March 2010, distinguishing between Executive and Non-Executive Directors in aggregate, with categorisation into appropriate components, and the number of Directors whose remuneration fell into each successive band of RM25,000, are set out below:-

GROUP 2010 2009 RM RM Non-Executive Directors:- – fees 896,387 985,472 – Attendance, other allowances & benefits 1,287,503 1,466,182

Executive Directors:- – Salaries, bonuses, allowances and other benefits 4,129,464 5,087,453

Total 6,313,354 7,539,107

Directors’ Non- Remuneration* Executive Executive Total

RM75,001 – RM100,000 1 1 RM100,001 – RM125,000 1 1 RM125,001 – RM150,000 1 1

RM175,001 – RM200,000 1 1

RM350,001 – RM375,000 2 2

RM425,001 – RM450,000 1 1

RM450,001 – RM475,000 1 1

RM4,125,001 – RM4,150,000 1 1

Total 1 8** 9

* Remuneration paid to the Directors of the Company include fees, salaries, other emoluments including bonus, EPF contributions, attendance & other allowances and benefits-in-kind.

** Includes one Non-Executive Director who has resigned during the financial year.


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2. SHAREHOLDERS AND INVESTORS2.1 Dialogue between the Company and Investors The Board values dialogue with investors and appreciates the keen

interest of shareholders and investors in the Group’s performance. The Board acknowledges the need for shareholders to be informed of all material business matters affecting the Group.

The Company communicates with its shareholders and stakeholders on regular basis through timely release of financial results on a quarterly basis, press releases and announcements to Bursa Malaysia which provide an overview of the Group’s performance and operations for investment decision making, through accessible channels. In addition, the Company initiates dialogues with its shareholders and stakeholders as and when required. Media coverage on the Group is initiated at regular intervals to provide wider publicity and improve the understanding of the Group’s business.

The Group maintains a website at www.drb-hicom.com which can be conveniently accessed by the shareholders and the general public. The Group’s website is updated from time to time to provide the latest and comprehensive information about the Group, including press releases and quarterly announcements of the Group results.

2.2 General Meetings General Meetings are the principal forum for dialogue with shareholders.

The Annual General Meeting and Extraordinary General Meeting(s) provide opportunity for interaction amongst shareholders, Directors and management. The Company sends out the Notice of the Annual General Meeting and annual reports to shareholders at least twenty-one (21) days before the date of the meeting. Items of special business included in the notice of the meeting are accompanied by an explanatory statement to facilitate full understanding and evaluation of the issues involved. Circulars to Shareholders together with the Notices of Extraordinary General Meeting are sent out to shareholders at least fourteen (14) days before the date of the meeting.

Besides the usual agenda for the Annual General Meeting, the Board presents a comprehensive review of the progress and business performance of the Group as contained in the Annual Report and provides opportunities for shareholders to raise questions pertaining to the business activities of the Group. The Board of Directors, Senior Management and relevant advisers are available to provide responses to questions raised and give clarifications to the shareholders during these meetings.

the adoption of the KPis commenced during the financial year ended 31 March 2007, as part of the overall governance to enhance performance management, financial performance and shareholders’ value of the company. Following this, the KPis were formulated based on two main segments ie. Corporate/financial and priorities. for the Group Managing Director and the Management Team, there was greater emphasis on sustainability of growth, underpinned by the relevant financial factors.

The performance based bonuses are strictly tied to the achievement of their KPis. the bonus formula is designed to promote additional effort and initiatives beyond the KPi targets. Performance assessments of these personnel together with the rewards due were rigorously undertaken at the Management and NRC levels with the Board making the final determination pursuant to the recommendations of the Committee.

d) Remuneration of Key Senior Management Personnel The NRC as well as the Board ensure that the remuneration

packages of Directors and Key senior management Personnel are sufficiently attractive to retain persons of high calibre in tandem with their respective contribution for the year. This would ensure that the Group’s remuneration packages remain competitive and in line with the Group’s corporate objective so as to safeguard the interest of the shareholders.

e) Benefits-In-Kind Other customary benefits, such as use of company car, driver and

handphone expenses/allowance were made available to the Chairman and Group Managing Director as appropriate.

f) Terms and Conditions of Employment The Group Managing Director is employed on terms and conditions

as approved by the Board.


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3. ACCOUNTABILITY AND AUDIT3.1 Financial Reporting pursuant to Bursa Securities listing Requirements, the Directors are

responsible to present a true and fair assessment of the Group’s position and prospects through the quarterly reports, issuance of Annual Audited financial Statement and corporate announcements on significant developments affecting the Group. This would ensure that shareholders are provided with a balance and meaningful evaluation of the Group’s performance.

The Board is assisted by the Audit Committee in scrutinising the financial statements and information for disclosure to ensure accuracy, adequacy and completeness.

The Statement of Responsibility by Directors in respect of the preparation of the annual audited financial statements of DRB-HICOM and DRB-HICOM Group is set out on page 117 of this Annual Report.

3.2 Internal Control The Board has overall responsibility for maintaining a system of internal

controls that provides reasonable assurance of effective and efficient operations, and compliance with laws and regulations, as well as with internal procedures and guidelines.

The effectiveness of the system of internal controls of the Group is reviewed by the Audit Committee periodically during its quarterly meetings. The review covers the Group’s financial, accounting and reporting policies and practices, reports of the internal and external auditors and the adequacy of the system of internal controls to safeguard the shareholders’ interests and Group’s assets. The Group Internal Audit Division monitors compliance with policies and the effectiveness of internal control structures across the Group, whilst legal and regulatory compliance are the responsibilities of the Corporate & Services and Corporate Secretarial Divisions respectively.

The officers responsible are as follows:-

i. Dato’ Khalid bin Abdol rahman Head, Corporate & Services

yBhg Dato’ Khalid holds a master’s Degree in Business Administration and has more than 20 years experience in corporate planning and corporate finance.

The results of all the resolutions set out in the Notice of the General Meeting were announced on the same day via Bursa link which is accessible on the website of Company and Bursa Malaysia.

Any queries or concerns regarding the Group may be conveyed to the following persons:-

i. Dato’ Syed Mohamad bin Syed Murtaza Chairman/Senior Independent Non-Executive Director Telephone number : 603 2052 7689 facsimile number : 603 2052 7696 E-mail : [email protected]

ii. Dato’ sri Haji mohd Kamil bin Jamil Group Managing Director Telephone number : 603 2052 8554 facsimile number : 603 2052 8654 E-mail : [email protected]

iii. Dato’ Khalid bin Abdol rahman Head, Corporate & Services Telephone number : 603 2052 8172 facsimile number : 603 2052 8928 E-mail : [email protected]

iv. Hamdan bin Ahammu Head, Corporate Communications Telephone number : 603 2052 8238 facsimile number : 603 2052 7891 E-mail : [email protected]

v. Chan Choy lin, Carol Head, Corporate Secretarial Telephone number : 603 2052 7695 facsimile number : 603 2052 7696 E-mail : [email protected]

2.3 Dividend The Company intends to maintain a consistent and regular dividend

payment policy. The amount and timing for payments will depend on level of cash and retained earnings, projected levels of capital expenditure and other investment plans as the Board deems relevant.


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3.4 Relationship With External Auditors The Audit Committee meets with the internal and external auditors at

least twice a year to discuss any issues arising from their audits without the presence of the Executive Directors and Management. The Audit Committee also meets with the external auditors whenever it deems necessary. The external auditors also highlight to the Audit Committee and Board of Directors on matters that require Board’s attention together with the recommended corrective actions thereof. The Management is held responsible for ensuring that all these corrective actions are undertaken within an appropriate time frame.

The role of the Audit Committee in relation to the external auditors may be found in the Report of the Audit Committee set out at pages 109 to 113. The Group has always maintained a close and transparent relationship with its external auditors in seeking professional advice and ensuring compliance with MASB Approved Accounting Standards in Malaysia for Entities Other than private Entities.

The Audit Committee also reviews the proposed reappointment of the external auditors of the Company and their fees on annual basis to ensure that the independence of the external auditors is not compromised.

for the audit of the financial statements of DRB-HICOM and its subsidiaries for the f inancial year ended 31 March 2010, pricewaterhouseCoopers have confirmed their independence in accordance with the firm’s requirements and with the provisions of the By-laws on professional Independence of the Malaysian Institute of Accountants.

3.5 The Board had approved the above statement in accordance with a resolution of the Board of Directors dated 15 July 2010.

Signed on behalf of the Board of Directors

DATO’ SYED MOHAMAD BIN SYED MURTAZAChairman

ii. Mohammed bin Shukor Ismail Head, Internal Audit

Encik Mohammed Shukor is an accountant by profession. He also holds a Masters Degree in Business Administration and is a Certified Internal Auditor. He has more than 20 years’ experience in auditing and accounting.

iii. Chan Choy lin, Carol Head, Corporate Secretarial

Ms Chan is an accountant by profession. She has more than 20 years’ working experience in auditing, secretarial and accounting.

The Group’s Statement on Internal Control, which provides an overview of the state of internal controls within the Group, is set out from pages 105 to 108 of this Annual Report.

3.3 Related Party Transactions All related party transactions are reviewed by the Audit Committee to

ensure compliance with Bursa Securities listing Requirements and the appropriateness of such transactions before recommending to the Board for its approval. with regard to recurrent related party transactions (“RRpTs”), the Board has established and adopted the appropriate procedures to ensure such transactions will be negotiated and agreed at an arm’s length basis, and on normal commercial terms which are not more favourable to the related parties than those generally available to the public, and are not to the detriment of the minority shareholders of the Company.

The Shareholders’ mandate in respect of RRpTs is obtained at the annual general meeting of the Company on a yearly basis prior to entering of such transactions. The breakdown of the aggregate value of RRpTs transacted during the financial year ended 31 March 2010 is disclosed on page 115 of the Annual Report in line with the disclosure and threshold requirements of Bursa Securities listing Requirements. Other significant related party transactions are set out under the Notes to the financial Statements on pages 217 to 218 of this Annual Report.


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The Board also emphasises the importance of internal control system and risk management practices of the Group that should be responsive to a dynamic and ever challenging business environment to enable the Group to continuously achieve i ts goals and objectives.

BOARD RESPONSIBILITYThe Board acknowledges its overall responsibility and accountability for the Group’s system of internal control which includes the establishment of an appropriate control environment and framework. It is recognised that the Group’s system of internal control can only provide reasonable but not absolute assurance against any occurrence of material misstatement or loss, and that the risk management process is designed to manage or minimise risks that hinder the Group from achieving its goals and objectives.

The Board confirms that there is a continuous process of reviewing and reporting of the adequacy and integrity of the Group’s system of internal control and risk management process coupled with formulation and revision of policies & procedures and management of performance rendering the governance system of the Group as effective to provide reasonable assurance in safeguarding shareholders’ investments, Group’s assets and other stakeholders’ interests.

INTERNAL CONTROLThe key components of internal control as subscribed by the Group can be categorised as follows:

1) Control Environment: Board Committees The Board acknowledges that ensuring sound

governance requires effective interaction among the Board, Management, internal auditor and external auditor. The Board, in carrying out its responsibilities, is assisted by the committees namely the Audit, Nomination and Remuneration, Board Risk and Management Committees.

Audit Committee The Audit Committee (“AC”), comprising four

Independent Non-Executive Directors, provides oversight of the internal and external audit processes and reviews the reports of the auditors on adequacy and integrity of the systems of internal control and the financial statements of the Group. please refer to pages 109 to 113 in the summary report on the activities of the AC.

Organisational Structure & Reporting Line There is a formal organisation structure with clear

lines of reporting and responsibility to ensure proper segregation of duties, authority and accountability within the Group.

directors’ statement oninternal control

THE BOARD Of DIRECTORS (“BOARD”) Of DRB-HICOM BERHAD AffIRMS THAT ITS ROlE lIES AT THE VERy CORE Of CORpORATE GOVERNANCE. HENCE, THE BOARD’S COMMITMENT TOwARDS ENSuRING AND MAINTAINING A SOuND SySTEM Of INTERNAl control encomPAsses GooD GoVernAnce AnD risK AnD control Processes wITHIN THE GROup.


105

directors’ statement on internal control (continued)

Whistle Blower Policy The whistle Blower policy outlines the Group’s commitment

towards enabling employees to raise concerns in a responsible manner regarding any wrongdoing or malpractice without being subject to victimisation or discriminatory treatment, and to have such concerns properly investigated. The policy promotes a culture of honesty, openness and transparency within the Group.

The Group encourages its employees to make any disclosure openly and honestly. All disclosures made under the policy will be dealt with in confidence. It will be the task of the Group Internal Audit Division (“GIAD”) or any other assigned investigating party to assess, investigate and report on the complaints or concerns raised.

Business Planning and Budgetary The Group manages performance of the operating entities,

within which business planning and budgetary exercise are established annually and actual performance are monitored periodically against set targets.

4) Information and Communication: Timely communication of relevant information such as the

Group’s achievement and changes with regard to corporate and organisational structure and policies and procedures enabling employees to focus on and to perform their responsibilities effectively.

The Heads of operating entities within the Group also participate in business dialogue programmes with Senior Management of the Group to discuss strategies and challenges faced towards achieving the business goals and objectives.

Vision, Mission and Shared Values Management has established vision and mission statements,

and shared values to steer and provide direction to the employees towards achieving the goals and objectives of the Group.

Ethics and Business Practice The Group’s Code of Ethics and Business practice outlines the

standard of behaviour and ethics that is expected of employees of the Group in all business dealings.

2) Risk Assessment: Enterprise Risk Management Risk management is embedded within the system of internal

controls and business environment. Managing risks is a shared responsibility and is integrated within the Group’s governance, business processes and operations. Employees’ commitment towards risk management process is continuously emphasised and enforced via awareness and monitoring by the Risk Management Department. please refer to page 107 on summary elaboration of the Group’s risk management process.

3) Control Activities: Policies and Procedures The Group has established policies and procedures to govern

the various Group processes. This ensures consistency in practice whilst providing guidance and direction for proper management and governance of the operation and business activities within the Group.

Among the policies and procedures in place are the financial Authority limit, Human Resources, Information Technology, procurement, Risk Management, Code of Ethics and Business practices, Management Control and Internal Control framework, whistle Blower and Anti-fraud policies.


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Risk CommitteesThe Board Risk Committee (“BRC”) has a broad mandate to ensure the effective implementation and compliance of the objectives outlined in the Group Risk Management policy of DRB-HICOM Berhad. The members of the BRC comprise three (3) Independent, Non-Executive Directors with the Group Managing Director, Group Chief financial Officer and Head of Risk Management Department attending as invitees to the Committee.

The main underlying principles of the Group’s Risk Management policy are:

• Providing a policy and organisational structure for the management of risks that DRB-HICOM assumes in its activities;

• Defining risk management roles and responsibilities within the organisation and outlining control procedures to mitigate risks;

• ensuring consistent and acceptable management of risk throughout the business;

• Defining a reporting framework to ensure effective communication of necessary risk management information to senior management and personnel engaged in risk management activities;

• remaining flexible to accommodate the changing risk management needs of the organisation while maintaining control of the overall risk position;

• Detailing the approved methods for risk assessment; and

• Providing a system to accommodate the central accumulation of risk data.

The BRC of DRB-HICOM Berhad delegates to the Risk Management Committee (“RMC”) the responsibility for creating a risk-aware culture and building the necessary knowledge for risk management at every level of Management. The RMC shall also be responsible for ensuring the effective implementation of the Group Risk Management policy, framework and the management of risks and controls associated with Group operations as well as compliance with applicable laws and regulations. The RMC is responsible for periodical reporting of key risk exposures to the BRC.

The composition of the RMC shall comprise the Group Managing Director, Group Chief financial Officer and Group Directors of the Business Sectors together with Heads of the relevant Divisions as invitees.

5) Monitoring: Internal Audit Function The business processes and conduct of the operating entities

within the Group are continuously assessed by the GIAD in the context of adequacy and effectiveness of the financial and operational controls and risk management. The GIAD reportes to the Audit Committee and addresses to the Management all the audit observations noted in the course of their review and follows up and monitors the status of actions taken by the operating entities in addressing the audit observations. please refer to page 113 on the statement on the internal audit function in the AC Report.

Besides, the Management themselves, under the various corporate head office functions such as procurement and information technology, also undertake periodically the reviews on compliance and adequacy of the control systems and procedures of the Group companies and operating units.

Performance Management In order to nurture the quality and competencies of employees,

continuing education, training and development programs are emphasised to enable employees to discharge their duties effectively.

progressively, employees’ performances are measured according to the sets of key performance indicators aligned to their functions as assigned to them in which they are expected to accomplish.

RISK MANAGEMENTOverviewRisk Management is regarded by the Board of Directors of DRB-HICOM Berhad to be an integral part of business operations. To this end, the Board Risk Committee (“BRC”) of DRB-HICOM Berhad has been established and entrusted with the overall responsibility for overseeing the risk management activities of the Group and approving appropriate risk management procedures and measurement methodologies across the organisation.


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directors’ statement on internal control (continued)

Risk Management FrameworkThe Group has in place a formal and structured Risk Management framework developed in accordance with the COSO Enterprise Risk Management-Integrated framework established by the Committee of Sponsoring Organisations of the Treadway Commission, uSA. The framework essentially links the Group’s corporate objectives and goals to its primary risks, controls and action plans to allow for a comprehensive and effective assessment of events that have adverse impacts on the Group’s core businesses.

Accountability for Risk ManagementEach sector (and each operating unit therein) is expressly responsible for managing the key risks associated with its business and investments. All material and significant risks shall be identified, assessed, analysed, treated, monitored and reported in accordance with the Group Risk Management policy and framework outlined above.

The Head of Risk Management Department regularly and periodically conducts workshops and briefings to Divisions within the Corporate Office, Business Sectors and the Operating units to facilitate and improve on the awareness of risk management as well as to inculcate the risk culture within each of the prescribed entities to strengthen their risk management oversight and process.

Risk ReportingThe Group’s Risk Management policy and framework provide for regular review and reporting. Such reports include an assessment on the significance of key risks impacting the Group’s businesses as well as an evaluation of the effectiveness of controls and action plans put in place for additional controls. The key elements of the reporting process are:

• review and discussion of key risks, controls and action plans at the Operating units’ monthly management meetings;

• editing and updating of key risks, controls and status of action plans on a periodical basis;

• Digital confirmation and sign-off on all risks represented at the Divisional, Sectoral and Operating unit levels on a quarterly basis;

• Quarterly presentation and review of the risk management Board paper at each of the Operating units’ Board of Directors meetings;

• Presentation, review and discussion of the sector’s top Key Risks by the RMC on a quarterly basis; and

• Presentation of the Group’s top Key risks to the Brc as well as at the Board Meeting on a semi-annual basis.

CONCLUSIONfor the financial year under review, the Board is of the opinion that the system of internal controls and risk management processes are adequate and sound to provide reasonable assurance in safeguarding shareholders’ investments, the Group’s assets and other stakeholders’ interests as well as in addressing key risks impacting the business operations of DRB-HICOM Berhad. There were no major internal control weaknesses identified that may result in any material loss or uncertainty that would require disclosure in this annual report.

The statement has been approved by the Board of Directors at its meeting on 15 July 2010.


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1.0 COMPOSITION AND ATTENDANCE AT MEETINGS The composition of the Audit Committee (AC) members as well as their attendance at meetings is set out below:

Director Designation Status of DirectorshipAttendance at

meetings

yBhg Datuk Haji Abdul Rahman bin Mohd Ramli

Chairman of the Audit Committee

Independent Non-Executive Director

5 out of 5(100%)

yBhg Dato’ Syed Mohamad bin Syed Murtaza Member(resigned w.e.f. 17 July 2009)


1 out of 2(50%)

yBhg Dato’ Noorrizan binti Shafie Member(resigned w.e.f. 26 November 2009)

Non-Independent Non-Executive Director

4 out of 4(100%)

yBhg Tan Sri Marzuki bin Mohd Noor Member(appointed w.e.f. 26 November 2009)


1 out of 1(100%)

Mr Ong Ie Cheong Member Independent Non-Executive Director

5 out of 5(100%)

Mr Ooi Teik Huat Member Independent Non-Executive Director

5 out of 5(100%)

audit committeereport

THE BOARD Of DIRECTORS IS plEASED TO pRESENT THE AuDIT COMMITTEE REpORT fOR THE fINANCIAl yEAR (“fy”) ENDED 31 MARCH 2010.


109

audit committee report (continued)

Conforming to the requirements of the Malaysian Code on Corporate Governance (“MCCG”), all the current four members of the AC are Independent Non-Executive Directors. During the fy2009/10, two of the AC members had resigned and one new member was appointed.

The AC Chairman, yBhg Datuk Haji Abdul Rahman bin Mohd Ramli and one of the AC members, Mr Ooi Teik Huat, are members of the Malaysian Institute of Accountants (“MIA”) thereby complying with paragraph 15.09(1)(c)(i) of the listing Requirements that requires at least one of the AC members fulfilling the financial expertise requisite.

In terms of attendance at the AC meetings, the quorum requirement for all five meetings held during fy2009/10 as indicated in the table above was fulfilled. The Group Managing Director (”GMD”) together with the Group Chief financial Officer (“GCfO”) were invited to brief the AC on the Group’s financial performance and relevant corporate matters and to attend to any queries raised by the AC. The Head of Group Internal Audit Division (“GIAD”) attended all AC meetings and presented the internal audit reports to the AC. Other than results and reports of internal audits, the Head of GIAD also presented at the meetings the summary of audit activities, internal audit plan as well as audit staff strength. The external auditors also attended AC meetings to present the audit scope and plan, and the auditors’ report on the audited annual financial statements.

All issues discussed and deliberated during the AC meetings were minuted by the Company Secretary and the AC conveyed any matters of significant concern raised by the internal and external auditors to the Board.

2.0 TERMS OF REFERENCE The AC shall be established to assist the Board in fulfilling its

oversight responsibilities. The AC shall review and ensure that the process of assessing risk, control and governance, including operational and financial controls, business ethics and compliance are properly managed and monitored.

2.1 Composition The following requirements are to be fulfilled by the

Board in the appointment of the AC from among its members:-

a. the AC must be composed of no fewer than three (3) members, the majority of whom must be Independent Non-Executive Directors;

b. the Chairman of the AC shall be appointed by the Board from among the Independent Non-Executive Directors and at least one member of the AC must be a member of the Malaysian Institute of Accountants or must have at least three (3) years’ working experience and;

i) must have passed the examinations specified in part I of the 1st Schedule of the Accountants Act 1967; or

ii) must be a member of one of the associations of accountants specified in part II of the 1st Schedule of the Accountants Act 1967.

c. Alternate Directors shall not be appointed as a member of the AC; and subject to any regulatory disqualification, members of the AC shall not be removed except by the Board.

d. In the event of any vacancy in the AC, the Board shall within three (3) months fill the same so as to comply with all regulatory requirements. In any event the Board shall review the term of office and performance of the AC and each of its members at least once every three (3) years.

2.2 Meetings and Attendance The quorum for all meetings of the AC shall not be less

than three (3), a majority of whom shall be Independent Non-Executive Directors. The Chairman shall chair all meetings and in his absence, another Independent Non-Executive Director shall chair it.

a. Meetings shall be held not less than four (4) times a year and the GMD, GCfO and Head of GIAD shall, by invitation, attend the meetings.


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b. The external auditors are normally invited to attend meetings as and when necessary.

c. The AC shall meet separately with the internal and external auditors at least twice a year without the attendance of the Management.

d. The Company Secretary shall be the Secretary of the AC and shall provide the necessary administrative and secretarial services for the effective functioning of the AC. The draft minutes shall be circulated to the AC members for comment and the signed minutes shall be tabled at the subsequent Board Meeting.

2.3 Authority The Board has empowered the AC to:-

a. investigate any activity within the scope of the AC’s duties and its terms of reference and shall have full and unrestricted access to any information or documents relevant to the AC’s activities;

b. obtain independent legal or other professional advice as necessary;

c. communicate directly with the external auditors, internal auditors and all employees of the Group;

d. have adequate resources to perform its duties as set out in its terms of reference; and

e. make recommendations for improvements of operating performance and management control a r i s ing f rom in terna l and ex terna l aud i t recommendations.

2.4 Responsibilities and Duties The functions of the AC have been expanded to include

matters specified in the Malaysian Code on Corporate Governance as follows:-

a. Risk Management and Internal Control Ensure that Management has in place an adequate

system of risk management and internal control to safeguard shareholders’ interests and the Company’s assets.

b. Financial Reporting Review the annual and quarterly financial results of

the Group focusing on, among others, financial disclosures, changes in accounting policies and practices and compliance with MASB Approved Accounting Standards in Malaysia for Entities Other than private Entities and Bursa Malaysia Main Market listing Requirements.

c. Internal Audit In respect of the internal audit function:-

i. to review the adequacy of the scope, functions, competency and resources of the GIAD and to assess whether it has the necessary authority to carry out its responsibilities with regards to the annual audit plan;

ii. to review internal audit programme and results of the internal audit process and where necessary ensure that appropriate action is taken on the recommendations of the GIAD;

iii. to review any appraisal or assessment of the performance of the Head of GIAD as well as approve the appointment or termination of senior staff members of the GIAD; and

iv. to discuss any issues from the audits with the Head of GIAD separately without the presence of Management.

d. External Audit with regards to external auditors:-

i. to review and consider the appointment, resignation or termination of external auditors and their audit fee;

ii. to discuss with the external auditors, prior to the commencement of audit, the nature and scope of audit and to ensure coordination where more than one audit firm is involved;

iii. to review with the external auditors the audit plan, their evaluation of the systems of internal accounting controls, their audit report and the assistance given by the Company’s officers to the external auditors;


111

audit committee report (continued)

iv. to review the quarterly and year-end annual financial statements before submission to the Board and announcements to the Bursa Malays ia Secur i t ies Berhad, focusing particularly on:-

• any changes in accounting policies and practices;

• significant adjustments arising from the audit;

• the going concern assumption;

• compl iance wi th mAsB Approved Accounting Standards in Malaysia for Entities Other than private Entities, Bursa Malaysia Main Market listing Requirements and other legal requirements; and

• to convene meeting at least twice a year on any issues from the audits, with the external auditors separately without the presence of Management.

v. to review the external auditor’s Management letter and Management’s response.

e. Other Responsibilitiesi. to instruct the external and internal auditors

that the AC expects to be advised if there are any areas that require their special attention inc lud ing major f ind ings o f in terna l investigations and Management’s response;

ii. to review any related party transactions that may arise within the Company or Group in complying with the listing Requirements;

iii. to review any allocation of share options pursuant to the Employees’ Share Option Scheme (“ESOS”) granted to employees in the Group; and

iv. to consider and examine any other matters as the AC considers appropriate or as instructed by the Board of Directors.

3.0 SUMMARY OF ACTIVITIES The following activities were carried out by the AC during the

fy2009/10 in accordance with the terms of reference of the AC:-

a. The AC deliberated with the external auditors the results of audit of the annual audited financial statements and their Report to the Audit Committee and the responses by the Management at its meeting;

b. The AC reviewed the Statement on Internal Control and Statement on Corporate Governance prior to inclusion in the Company’s Annual Report;

c. The AC reviewed the Group’s procedures in respect of recording recurrent related party transactions (“RRpT”) and the propriety of proposed related party transactions to ensure that they were not more favorable to the related parties than those generally available to the public and were not detrimental to minority shareholders;

d. The AC reviewed the Audit plan with the external auditors encompassing their audit scope and proposed fees for the statutory audit and the review of the Directors’ Statement on Internal Control for fy2009/10;

e. The AC reviewed the unaudited quarterly financial results of the Group for fy2009/10 during the financial year and the annual audited financial statements of the Group and company for fy2009/10 at i ts meeting before recommending the same to the Board for approval subsequently;

f. The AC reviewed and approved the GIAD’s Annual Internal Audit plan. The AC also reviewed the internal audit reports presented by GIAD at each AC meeting with respect to adequacy of audit resources, status of audit activities, audit findings and Management’s responsiveness to the findings; and

g. The AC members attended relevant mandatory accreditation and continuing education programmes during the financial year under review. AC members also attended briefings and visited various subsidiaries within the Group to acquire a better insight on related businesses and operations.


112

4.0 INTERNAL AUDIT FUNCTION4.1 Roles and Responsibilities The internal audit function is an integral part of the

assurance structure of the Group. It is carried out by GIAD with its primary responsibility to provide reasonable assurance to the AC on the adequacy and effectiveness of the risk, control and governance processes within the Group by undertaking independent, objective and systematic reviews of the system of internal control and risk management of the Group companies and operating units.

However, those Group companies governed by the Banking and financial Institutions Act, 1989 or regulated by Bank Negara Malaysia are under the purview of the AC and internal audit function of the respective financial institutions.

4.2 Audit Resources The Head of GIAD, who reports directly to the AC, is

assisted by 5 internal audit managers and 17 other internal auditors, making up the internal audit staff strength to 23. The AC reviews and approves the GIAD’s annual audit plan and staff resource requirements to ensure that the function is adequately resourced with competent and proficient internal auditors.

During the fy2009/10, a total of RM2.29 million was incurred as part of resource allocation for the Group’s internal audit function, covering mainly on manpower, travelling and training costs.

4.3 Audit Activities During the fy2009/10, GIAD executed a total of 84

audits which comprised of scheduled and ad-hoc audit engagements including audit investigations covering the automotive manufacturing and distribution, property development and infrastructure, and services sectors. All of the internal audit activities in the financial year under review were undertaken in-house by the GIAD. None of the components of the internal audit function were outsourced to external service providers.

All findings resulting from the audits were reported to the AC, the Group Management and the relevant operating units. The Management of the operating units audited are accountable to ensure proper handling of the audit issues and implementation of their action plans within the timeframe specified. Actions taken by the operating units audited were followed up by GIAD and the status updated in the subsequent audits.

4.4 Quality Management System The GIAD continues to maintain its quality assurance and

continual improvement program covering its internal audit processes through the iso 9001:2008 Quality management System, which is subject to an in-house quality audit and external annual surveillance assessment by a certification body.

The GIAD is also subject to an external quality assessment review by a qualified independent assessor once every five years as required by the International Standards for the professional practice of Internal Auditing. The external quality assessment review by a qualified independent assessor was last conducted in 2007 and in this regard GIAD generally conforms to the International Standards for the professional practice of Internal Auditing.


113

additionalcompliance information

UTILISATION OF PROCEEDSDuring the financial year, there was no financing raised by the Company which required the approval of Securities Commission.

SHARE BUYBACKSDuring the financial year, there were no share buybacks by the Company.

OPTIONS, WARRANTS OR CONVERTIBLE SECURITIESThe Company has not issued any options, warrants or convertible securities during the financial year.

AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”)During the financial year, the Company did not sponsor any ADR or GDR programme.

VARIATION IN RESULTSThe Company did not release or announce any profit estimate, forecast or projection during the financial year under review.

PROFIT GUARANTEEDuring the financial year, there was no profit guarantee issued by the Company.


114

RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATUREBy a Resolution of the Annual General Meeting of the Company held on 10 September 2009, a mandate was granted by the shareholders for recurrent related party transactions of a revenue or trading nature, to be entered into during the period 11 September 2009 to 15 September 2010 between the Company or its subsidiary companies and related parties, the latter being based on estimates. As required, below is a listing of the said transactions by related companies that are more than RM46 million as having been actually entered into during the financial year ended 31 March 2010:

No. Transacting Parties Interested Parties Nature of Transaction

Actual Transacted

Valuesfrom

1 April 2009 to 31 March 2010

(RM’000)

MOTOSIKAL DAN ENJIN NASIONAL SDN. BHD.

1. – Kawasaki Heavy Industries ltd.

– Sojitz Corporation

Major shareholders

– Kawasaki Heavy industries ltd.

– Sojitz Corporation

provision of technical support, technology transfer, supply of cKD components and payment of royalties

50,298

50,298

MATERIAL CONTRACTS INVOLVING DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTSave as disclosed below, there were no material contracts between the Company and its subsidiaries involving directors’ and major shareholders’ interest either still subsisting at the end of the financial year or, if not then subsisting, entered into since the end of the previous financial year:

(i) Operations and Maintenance Agreement between Rangkai positif Sdn. Bhd. (“Rp”) and Tanjung Bin power Sdn. Bhd. (“Tanjung Bin”) dated 25 July 2003 supplemented by supplemental agreements dated 4 August 2003 and 17 october 2003 (“o&m Agreement”).

pursuant to the O&M Agreement, Rp is to provide operation and maintenance services (“Services”) to the power plant owned by tanjung Bin comprising three (3) coal-fired generating units with a total capacity of 2,100 mW, located in the state of Johor (“tanjung Bin power plant”) which generates electricity to be sold to Tenaga Nasional Berhad based on a concession period of twenty five (25) years (“Term”). for the period from 1 April 2009 to 31 March 2010, the Services rendered by Rp for the Tanjung Bin power plant had amounted to RM285,395,916.

Rp is a 100% subsidiary of the Company.


115

additional compliance information (continued)

(ii) subcontract of operations and maintenance Agreement between teknik Janakuasa sdn. Bhd. (“tJsB”) and rP dated 12 october 2004 (“the Subcontract O&M Agreement”).

pursuant to the Subcontract O&M Agreement, Rp has subcontracted a part of its scope of works under the O&M Agreement (“subcontract services”) to tJsB. For the period from 1 April 2009 to 31 march 2010, the subcontract services rendered by tJsB to Rp for the Tanjung Bin power plant had amounted to RM130,443,624.

The Company acquired 100% beneficial equity interest in Rp from Tan Sri Dato’ Seri Syed Mokhtar Shah Syed Nor (“TSSM”) on 22 October 2008. TSSM also holds 90% equity interest in Etika Strategi which is a major shareholder of the Company.

SANCTIONS AND/OR PENALTIES IMPOSEDNo sanctions and/or penalties were imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies during the financial year ended 31 March 2010, save for road traffic offenses, if any.

STATEMENT ON REVALUATION POLICYThe Group does not have any revaluation policy.

NON-AUDIT FEESThe amount of non-audit fees paid/payable to the external auditors and their affiliated companies by the Group for the financial year ended 31 March 2010 are as follows:

RM’000pricewaterhouseCoopers 1,148pricewaterhouseCoopers Taxation Services Sdn. Bhd. 892pricewaterhouseCoopers Capital Sdn. Bhd. 575pricewaterhouseCoopers Advisory Services Sdn. Bhd. 2,505

5,120


116

statement ofdirectors’ responsibility

STATEMENT OF DIRECTORS’ RESPONSIBILITY IN RESPECT OF THE PREPARATION OF THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2010

The Directors are required by the Companies Act, 1965 (“the Act”) to ensure that the financial statements prepared for each financial year give a true and fair view of the state of affairs of the Group and the Company as at the end of the financial year and of the results and cash flows of the Group and the Company for the financial year. As required by the Act and the listing Requirements of Bursa Malaysia Securities Berhad, the financial statements have been prepared in accordance with MASB Approved Accounting Standards in Malaysia for Entities Other than private Entities and the provisions of the Act, modified by the accounting policies as set out in the Bank Negara Malaysia Guidelines and Shariah principles for a banking subsidiary company of the Group.

The Directors consider that in preparing the financial statements for the financial year ended 31 March 2010 set out on pages 119 to 230, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates and ensured that all applicable approved accounting standards have been followed.

The Directors have ensured that the accounting records to be kept by the Group and the Company have been properly kept in accordance with the provisions of the Act, which disclose with reasonable accuracy the financial position of the Group and of the Company.

this statement is made in accordance with a resolution of the Board of Directors dated 15 July 2010.


117

financial

statements119 DIRECTORS’ REpORT124 INCOME STATEMENTS125 BAlANCE SHEETS127 consoliDAteD stAtement oF cHAnGes in eQuity129 comPAny stAtement oF cHAnGes in eQuity130 CASH flOw STATEMENTS133 NOTES TO THE fINANCIAl STATEMENTS231 STATEMENT By DIRECTORS231 STATuTORy DEClARATION232 INDEpENDENT AuDITORS’ REpORT


118

The Directors of DRB-HICOM Berhad have pleasure in submitting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 March 2010.

PRINCIPAL ACTIVITIESThe Company is an investment holding company with investments in the automotive, services (including banking business), and property and infrastructure segments.

The principal activities of the subsidiary companies, jointly controlled entities and associated companies are described in Note 3 to the financial statements.

There have been no significant changes in these activities during the financial year.

FINANCIAL RESULTS

Group Company RM’000 RM’000

Net profit for the financial year 543,265 207,481

Attributable to: Equity holders of the Company 472,298 207,481 Minority interest 70,967 —

543,265 207,481

DIVIDENDSDividends paid/payable by the Company since 31 March 2009 were as follows:

RM’000

In respect of the financial year ended 31 March 2009: final gross dividend of 2.5 sen per share, less taxation of 25%, paid on 8 October 2009 36,248

In respect of the financial year ended 31 March 2010: Interim gross dividend of 1.5 sen per share, less taxation of 25% paid on 29 March 2010 21,749

Total dividends paid 57,997

The Directors now recommend the payment of a final gross dividend of 2.5 sen per share, less taxation of 25%, amounting to RM36,248,195 in respect of the financial year ended 31 March 2010, subject to the approval of shareholders at the forthcoming Annual General Meeting of the Company.

directors’report


119

directors’ report (continued)

RESERVES AND PROVISIONSAll material transfers to or from reserves and provisions during the financial year are disclosed in the financial statements.

SIGNIFICANT AND SUBSEQUENT EVENTS(a) On 20 April 2009, HICOM Holdings Berhad, effectively a 100% owned subsidiary company of the Group, completed the disposal of its entire 33.33% equity interest

in Continental Automotive Instruments Malaysia Sdn. Bhd. (“Continental”) to Continental Automotive GmbH for a total cash consideration of RM10,290,000. As a result, Continental ceased to be an associated company of the Group.

(b) On 24 December 2009, Glenmarie properties Sdn. Bhd. (formerly known as HICOM properties Sdn. Bhd.), a wholly-owned subsidiary company of the Group, completed the acquisitions of the entire equity interests in Benua Kurnia sdn. Bhd. (“BKsB”) and neraca Prisma sdn. Bhd. (“nPsB”). As a result, BKsB and nPsB became wholly-owned subsidiary companies of the Group. As part purchase consideration for the acquisitions of BKsB and nPsB, the Group had completed the disposals of connemara, serendah, Bukit Kledek, Gadek and Kupang estates for total sale consideration of rm341,742,000. the gain arising from the disposal of estates to the Group amounted to approximately RM211 million.

(c) on 28 January 2010, the company has incorporated a wholly-owned subsidiary company namely, Hicom university college sdn. Bhd. (“HucsB”). HucsB is involved in higher educational and vocational training focusing on programmes to enhance the competency and skill of human capital for the automotive and automotive related industries.

(d) On 29 March 2010, the non-interested shareholders of Edaran Otomobil Nasional Berhad (“EON”), a 79.05% owned subsidiary company of the Group, approved the special resolution in relation to the proposed selective capital reduction and repayment exercise under Section 64 of the Companies Act, 1965 (“proposed SCR”) at the Extraordinary General Meeting. The proposed SCR will result in the reduction of EON’s issued and paid-up share capital from RM248,992,823 comprising 248,992,823 EON Shares to RM168,164,209 comprising 168,164,209 EON Shares by way of cancelling a total of 80,828,614 EON Shares, as follows:

(i) all the outstanding EON Shares held by non-interested shareholders involving 52,147,493 EON Shares; and

(ii) the balance of 28,681,121 EON Shares held by HICOM Holdings Berhad (“HICOM”), effectively a 100% owned subsidiary company of the Group.

upon completion of the proposed SCR, HICOM will hold 168,164,209 EON Shares, representing the entire issued and paid-up share capital of EON.

On 30 April 2010, the High Court of Malaya confirmed the reduction of the capital of EON pursuant to Section 64 of the Companies Act, 1965 and on 11 May 2010, the sealed court order was lodged with the companies commission of malaysia. the scr was completed on 17 June 2010. As a result, on 18 June 2010, EON became a wholly-owned subsidiary company of the Group.

Consequently, the entire issued and paid-up share capital of EON was removed from the Official list of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) with effect from 9.00am on Friday, 2 July 2010, pursuant to Paragraph 16.07(b) of the main market listing requirements of Bursa malaysia.

(e) On 16 April 2010, Edaran Otomobil Nasional Berhad (“EON”), a 79.05% owned subsidiary company of the Group, and flora Areana Sdn. Bhd. (“fASB”), a wholly-owned subsidiary company of the Group, entered into a Share Sale Agreement (“SSA”) for EON to acquire 137,500 ordinary shares of RM1.00 each representing 55% of the issued and paid-up share capital in Multi Automotive Service and Assist Sdn. Bhd. from fASB for a total cash consideration of RM137,500 (“Internal Reorganisation”). The Internal Reorganisation is pending the fulfilment of the conditions precedent stated in the SSA.


120

DIRECTORSThe Directors who have held office during the period since the date of the last report are as follows:

Dato’ Syed Mohamad bin Syed Murtaza (Chairman)Dato’ sri Haji mohd Khamil bin Jamil (Group managing Director)Dato’ Noorrizan binti ShafieDato’ Ibrahim bin TaibDatuk Haji Abdul Rahman bin Mohd RamliTan Sri Marzuki bin Mohd NoorOng Ie CheongOoi Teik Huat

DIRECTORS’ INTERESTSAccording to the Register of Directors’ Shareholdings, particulars of deemed interests of Directors who held office at the end of the financial year, in shares of the Company and in its related corporations were as follows:

Number of ordinary shares of RM1.00 each

As at As at 1 April 2009 Acquired Disposed 31 March 2010

The CompanyIndirect*Ong Ie Cheong 20,000 — (20,000) —

Holding CompanyDirectDato’ sri Haji mohd Khamil bin Jamil 30,000 — — 30,000

* Interest of Spouse/Child of the Director.

Other than as disclosed above, according to the Register of Directors’ Shareholdings, none of the Directors in office at the end of the financial year held any interest in shares in the Company or its related corporations during the financial year.

DIRECTORS’ BENEFITSDuring and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than emoluments disclosed in Note 6 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.


121

directors’ report (continued)

NOMINATION AND REMUNERATION COMMITTEEthe nomination and remuneration committee establishes and recommends the remuneration structure and policy for the Directors and Key management officers whereupon such recommendations are made to the Board of Directors for approval.

The Nomination and Remuneration Committee consists of the following Directors:

Dato’ Syed Mohamad bin Syed Murtaza (Chairman/Senior Independent Non-Executive Director)Tan Sri Marzuki bin Mohd Noor (Independent Non-Executive Director)Ong Ie Cheong (Independent Non-Executive Director)

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTSBefore the income statements and balance sheets were made out, the Directors took reasonable steps:

(a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and had satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the Group and of the Company had been written down to an amount which they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group or of the Company to meet their obligations as and when they fall due.

At the date of this report, there does not exist:

(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liability of any other person; or

(b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading.


122

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (CONTINUED)In the opinion of the Directors, other than as disclosed in the financial statements:

(a) the results of the Group’s and of the Company’s operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature except for the gain on disposal of the estates of the Group as disclosed in the income statement; and

(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to substantially affect the results of the operations of the Group or of the Company for the financial year in which this report is made.

HOLDING COMPANYThe Directors regard Etika Strategi Sdn. Bhd., a company incorporated in Malaysia, as the holding company.

AUDITORSThe auditors, pricewaterhouseCoopers, have expressed their willingness to continue in office.

in accordance with a resolution of the Board of Directors dated 15 July 2010.

DATO’ SYED MOHAMAD BIN SYED MURTAzAChairman



123

incomestatementsfor The financial year Ended 31 March 2010

Group Company

2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

Revenue 4 6,314,134 6,101,427 323,223 231,475Cost of sales 5(a) (5,099,605) (5,201,320) — —

Gross profit 1,214,529 900,107 323,223 231,475Other income– gain on disposal of estates 211,433 — — —– gain on disposal of investment in associated companies — 567,481 — —– others 172,151 149,553 32,112 5,870Selling and distribution costs (144,073) (141,848) — —Administrative expenses (742,965) (519,111) (44,706) (24,577)Other expenses (113,437) (219,359) (13,860) (46,224)finance costs 8 (68,566) (95,655) (28,765) (43,327)Share of results of jointly controlled entities (net of tax) 18 56,250 63,246 — —Share of results of associated companies (net of tax) 19 72,572 70,529 — —

profit before taxation 5(b) 657,894 774,943 268,004 123,217Taxation 9 (114,629) (49,562) (60,523) (37,411)

Net profit for the financial year 543,265 725,381 207,481 85,806

Attributable to: Equity holders of the Company 472,298 660,507 Minority interest 70,967 64,874

543,265 725,381

Gross dividends per share (sen) 10 4.00 15.833

Basic earnings per share (sen) 11 24.43 47.41

The notes set out on pages 133 to 230 form an integral part of the financial statements.


124

Group Company

2010 2009 2010 2009 Restated Note RM’000 RM’000 RM’000 RM’000

ASSETSNON-CURRENT ASSETS property, plant and equipment 12 1,776,114 1,836,061 5,284 2,107 prepaid lease properties 13 72,983 74,511 — — Investment properties 14 542,571 585,515 147,642 155,164 land held for property development 16(b) 931,200 249,418 — — Subsidiary companies 17 – Investments — — 4,162,886 4,155,886 – Amounts due — — 1,016,170 946,283 Jointly controlled entities 18 331,925 334,083 9,800 9,800 Associated companies 19 409,691 417,321 71,803 71,803 Other investments 20(ii)&(iii) 1,191,961 879,254 — — Intangible assets 21 233,750 251,614 — — Deferred tax assets 22 130,635 139,465 — — Banking related assets – Investments: Held-to-maturity 20(i)(a) 28,224 28,346 — — – Investments: Available-for-sale 20(i)(b) 3,292,058 2,638,068 — — – Investments: Held-for-trading 20(i)(c) — 10,228 — — – financing of customers 23 5,166,102 4,672,622 — — – Statutory deposits with Bank Negara Malaysia 24 87,821 72,871 — —

14,195,035 12,189,377 5,413,585 5,341,043CURRENT ASSETS Non-current assets held for sale 25 — 140,674 — — Inventories 26 657,065 681,807 — — property development costs 16(a) 260,624 180,185 — — Trade and other receivables 27 1,167,169 1,304,033 20,480 92,314 Tax recoverable 125,557 152,151 18,367 17,435 Marketable securities 28 387,168 462,864 21,607 11,700 Short term deposits 29 1,201,953 892,119 118,010 38,234 Cash and bank balances 30 184,782 173,592 4,032 4,016 Banking related assets – Cash and short-term funds 31 5,775,383 3,569,105 — — – Investments: Held-to-maturity 20(i)(a) — 2,545 — — – Investments: Available-for-sale 20(i)(b) 720,747 663,385 — — – financing of customers 23 1,319,096 1,111,031 — —

11,799,544 9,333,491 182,496 163,699

TOTAL ASSETS 25,994,579 21,522,868 5,596,081 5,504,742

balancesheets

As At 31 March 2010


125

balance sheets (continued)

Group Company


EQUITY AND LIABILITIES Share capital 32 1,719,601 1,719,601 1,719,601 1,719,601 Reserves 2,860,135 2,441,143 3,091,720 2,942,236

Equity attributable to equity holders of the Company 4,579,736 4,160,744 4,811,321 4,661,837Minority interest 1,242,774 1,199,756 — —

TOTAL EQUITY 5,822,510 5,360,500 4,811,321 4,661,837

NON-CURRENT LIABILITIES life assurance fund 33 1,528,124 1,252,965 — — Deferred income 34 78,177 74,940 — — long term borrowings 35 902,153 930,357 191,000 96,000 provision for liabilities and charges 36 690 830 — — Deferred tax liabilities 22 46,357 35,653 1,662 2,370 Banking related liabilities – Deposits from customers 37 2,398,293 2,323,244 — —

4,953,794 4,617,989 192,662 98,370CURRENT LIABILITIES General and life insurance funds 38 519,838 433,067 — — Trade and other payables 39 1,880,961 1,527,352 401,098 589,535 provision for liabilities and charges 36 4,536 10,005 — — Bank borrowings 40 – Bank overdrafts 29,546 25,525 — — – Others 596,080 588,256 191,000 155,000 Current tax liabilities 28,788 — — — Banking related liabilities – Deposits from customers 37 12,049,941 8,295,458 — — – Deposits and placements of banks and other financial institutions 41 16,361 125,815 — — – Bills and acceptances payables 42 92,224 538,901 — —

15,218,275 11,544,379 592,098 744,535

TOTAL LIABILITIES 20,172,069 16,162,368 784,760 842,905

TOTAL EQUITY AND LIABILITIES 25,994,579 21,522,868 5,596,081 5,504,742

The notes set out on pages 133 to 230 form an integral part of the financial statements. The details of the 2009 restatement are set out in Note 48 (iii) (e) to the financial statements.


126

consolidated statement ofchanges in equity

Equity Issued and attributable fully paid Currency to equity ordinary Share Merger Translation Other holders Note shares Premium Reserve Differences Reserves Retained of the Minority (Note 32) (Note 43) (Note 44) (Note 45) (Note 45) Earnings Company Interest Total2010 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2009 1,719,601 20,701 911,016 6,305 29,210 1,473,911 4,160,744 1,192,016 5,352,760Adjustment to provisional goodwill 48(iii)(e) — — — — — — — 7,740 7,740

As restated 1,719,601 20,701 911,016 6,305 29,210 1,473,911 4,160,744 1,199,756 5,360,500Share of an associated company’s reserves — — — — 184 — 184 — 184Currency translation differences of subsidiary companies — — — 245 — — 245 863 1,108Share of subsidiary companies’ other reserves — — — — 36,602 (32,340) 4,262 1,827 6,089Acquisition of additional interests in a subsidiary company 48(i)(a) — — — — — — — (137) (137)

Net gain/(loss) not recognised in the income statement — — — 245 36,786 (32,340) 4,691 2,553 7,244Net profit for the financial year — — — — — 472,298 472,298 70,967 543,265Dividends paid to minority interest — — — — — — — (30,502) (30,502)final dividend in respect of financial year ended 31 March 2009 10 — — — — — (36,248) (36,248) — (36,248)Interim dividend in respect of financial year ended 31 March 2010 10 — — — — — (21,749) (21,749) — (21,749)

At 31 March 2010 1,719,601 20,701 911,016 6,550 65,996 1,855,872 4,579,736 1,242,774 5,822,510

Non-distributable


127

consolidated statement of changes in equity (continued)

Equity Issued and attributable fully paid Currency to equity ordinary Share Merger Translation Other holders Note shares Premium Reserve Differences Reserves Retained of the Minority (Note 32) (Note 43) (Note 44) (Note 45) (Note 45) Earnings Company Interest Total2009 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2008 1,007,607 20,701 911,016 5,150 153,342 813,552 2,911,368 959,777 3,871,145Share of an associated company’s reserves — — — — (475) — (475) — (475)Transfer of associated companies’ reserves — — — — (4,560) 4,560 — — —Release of statutory reserves on disposal of an associated company 49(v)(a) — — — — (113,635) 113,635 — — —Currency translation differences of subsidiary companies — — — 1,155 — (1,165) (10) — (10)Share of subsidiary companies’ other reserves — — — — 1,538 3,033 4,571 3,982 8,553Subscription of shares in subsidiary companies — — — — — — — 162,035 162,035Acquisition of additional interests in subsidiary 48(iii) companies (b)&(c) — — — — — — — (60,350) (60,350)Acquisition of a subsidiary company 48(iii)(e) — — — — — — — 171,077 171,077Disposal of a subsidiary company 49(iv) — — — — (7,000) 7,000 — — —

Net gain/(loss) not recognised in the income statement — — — 1,155 (124,132) 127,063 4,086 276,744 280,830Issue of ordinary shares for acquisitions of subsidiary companies (net of 32&48(iii) issuance cost) (d)&(e) 711,994 — — — — — 711,994 — 711,994Net profit for the financial year — — — — — 660,507 660,507 64,874 725,381Dividends paid to minority interest — — — — — — — (109,379) (109,379)final dividend in respect of financial year ended 31 March 2008 10 — — — — — (26,450) (26,450) — (26,450)Interim (special) dividend in respect of financial year ended 31 March 2009 10 — — — — — (100,761) (100,761) — (100,761)

At 31 March 2009 1,719,601 20,701 911,016 6,305 29,210 1,473,911 4,160,744 1,192,016 5,352,760


Non-distributable


128

Issued and fully paid ordinary Share Merger Retained shares Premium Reserve Earnings Note (Note 32) (Note 43) (Note 44) (Note 47) Total RM’000 RM’000 RM’000 RM’000 RM’000

2010At 1 April 2009 1,719,601 20,701 2,318,321 603,214 4,661,837Net profit for the financial year — — — 207,481 207,481final dividend in respect of the financial year ended 31 March 2009 10 — — — (36,248) (36,248)Interim dividend in respect of the financial year ended 31 March 2010 10 — — — (21,749) (21,749)

At 31 March 2010 1,719,601 20,701 2,318,321 752,698 4,811,321

2009At 1 April 2008 1,007,607 20,701 2,318,321 644,619 3,991,248Issue of ordinary shares for acquisitions of subsidiary 32&48(iii) companies (net of issuance cost) (d)&(e) 711,994 — — — 711,994Net profit for the financial year — — — 85,806 85,806final dividend in respect of the financial year ended 31 March 2008 10 — — — (26,450) (26,450)Interim (special) dividend in respect of the financial year ended 31 March 2009 10 — — — (100,761) (100,761)

At 31 March 2009 1,719,601 20,701 2,318,321 603,214 4,661,837


company statement ofchanges in equity

DistributableNon-distributable


129

cash flowstatementsfor The financial year Ended 31 March 2010

Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIESNet profit for the financial year 543,265 725,381 207,481 85,806Adjustments for non-cash items: Allowance for/(write back of) marketable securities and financing of customers (net) 96,235 47,927 (9,907) 27,081 Amortisation of – biological assets — 80 — — – intangible assets 20,623 8,934 — — – prepaid lease properties 1,411 1,512 — — Depreciation of property, plant and equipment 134,930 135,776 459 446 Doubtful debts (net of write backs) 14,693 31,351 2,879 4,980 finance costs 68,566 95,655 28,765 43,327 Impairment losses of – land held for property development — 21,103 — — – non-current assets held for sale — 5,795 — — – property, plant and equipment 71,336 14,678 — — Inventories written off/down (net of write backs) 10,255 36,557 — — loss/(gain) on disposal of shares in: – subsidiary companies — (470) — — – associated companies 201 (567,481) — — loss/(gain) on disposal of – investment properties 9 (55) — — – estates (211,433) — — — Marked to market loss/(gain) on derivatives (net) 4,371 — — — prepaid lease properties written off — 1,011 — — project expenditure written off — 1,377 — 1,377 provision for/(write back of) liabilities and charges (net) 2,802 5,460 — — Taxation 114,629 49,562 60,523 37,411 Dividend income (gross) (3,171) (4,321) (279,053) (183,538) Excess of fair value of net assets acquired over purchase consideration (137) (28,007) — — (Gain)/loss on disposal/write off of property, plant and equipment (3,582) 2,217 (16) (16) (Gain)/loss on disposal of investments (19,544) 9,949 — — (Gain)/loss on fair value adjustment of investment properties (5,755) 38,200 7,522 7,588 Gain on waiver of payables/borrowings (net) (20,135) (4,142) (20,135) (4,021) Gain arising from accretion of interest in a subsidiary company — (1,965) — — Interest income (31,750) (53,961) (33,858) (37,748) Net foreign exchange differences (14,283) 8,859 — — (Reversal of)/allowance for impairment loss of investments (13,237) 2,139 — 5,198 Share of results of jointly controlled entities (net of tax) (56,250) (63,246) — — Share of results of associated companies (net of tax) (72,572) (70,529) — —

Cash inflow/(outflow) before working capital changes 631,477 449,346 (35,340) (12,109)


130

Group Company

2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIES (Continued)Amounts due to customers on contracts (6,996) (7,276) — —General and life insurance funds 243,049 (94) — —Inter-company balances (92,665) 76,549 481 4,321Inventories 10,154 47,269 — —property development costs 3,821 (3,633) — —Trade and other receivables 157,898 (62,749) 50,730 1,368Trade and other payables 218,155 (84,351) (37,720) 12,394financing of customers (811,315) 133,026 — —Statutory deposits with Bank Negara Malaysia (14,950) 234,300 — —Deposits with customers 3,829,532 (1,239,927) — —Deposits and placements of banks and other financial institutions (109,454) (126,096) — —Bills and acceptance payables (446,677) (91,778) — —

Net cash generated from/(used in) operations 3,612,029 (675,414) (21,849) 5,974Interest received 31,387 57,469 48,901 20,033Dividends received 142,232 116,972 216,890 142,254finance cost paid (52,646) (117,781) (28,277) (40,879)Taxation paid, net of refunds (78,488) (60,504) — —provision for liabilities and charges paid (8,431) (8,776) — —

Net cash inflow/(outflow) from operating activities 3,646,083 (688,034) 215,665 127,382

CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of other investments by insurance subsidiary companies (1,224,698) (531,522) — —Acquisition of investments by a banking subsidiary company (1,166,334) (734,189) — —Acquisition of additional shares in subsidiary companies — (32,344) (7,000) (379,384)Cost incurred on land held for property development 2,141 (6,977) — —Expenditure on investment properties (6,164) (14,769) — —Net cash (outflow)/inflow from acquisitions of subsidiary companies 48 (144,070) 4,267,713 — —Net cash inflow from disposal of subsidiary companies 49 — 3,782 — —proceeds from disposal of associated companies 49 10,290 1,353,401 — —proceeds from disposal/maturity of other investments by insurance subsidiary companies 1,117,300 410,615 — —proceeds from disposal of investments by a banking subsidiary company 518,449 255,708 — —proceeds from disposal of property, plant and equipment/investment properties 13,223 4,765 205 35purchase of property, plant and equipment/intangible assets (135,110) (160,675) (3,825) (337)Subscription of shares by minority interest in subsidiary companies — 164,000 — —Share issue costs paid — — — (5,370)

Net cash (outflow)/inflow from investing activities (1,014,973) 4,979,508 (10,620) (385,056)


131

cash flow statements (continued)

Group Company

2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM FINANCING ACTIVITIESDividends paid to minority interest (30,502) (109,379) — —Dividends paid to shareholders (57,997) (127,211) (57,997) (127,211)fixed deposits held as security/maintained as sinking fund (26,568) (3,861) — —proceeds from bank borrowings 749,974 975,646 140,000 102,900Repayment of borrowings (769,315) (1,968,815) (9,000) (794,373)(Repayment of)/proceeds from loans to subsidiary/associated companies (net) — — (198,256) 1,031,404

Net cash (outflow)/inflow from financing activities (134,408) (1,233,620) (125,253) 212,720

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 2,496,702 3,057,854 79,792 (44,954)Effects of foreign currency translation 11 25 — —cAsH AnD cAsH oF eQuiVAlents At BeGinninG oF tHe FinAnciAl yeAr 4,599,213 1,541,334 42,250 87,204

cAsH AnD cAsH oF eQuiVAlents At enD oF tHe FinAnciAl yeAr 7,095,926 4,599,213 122,042 42,250

(a) Cash and cash equivalents at end of the financial year comprise the following:

Short term deposits 1,201,953 892,119 118,010 38,234 Cash and bank balances 184,782 173,592 4,032 4,016 Cash and short term funds of a banking subsidiary 5,775,383 3,569,105 — — Bank overdrafts (29,546) (25,525) — —

7,132,572 4,609,291 122,042 42,250 less: fixed deposits held as security/sinking fund 29(b) (36,646) (10,078) — —

7,095,926 4,599,213 122,042 42,250

(b) Non-cash transactions The principal non-cash transactions during the financial year comprise

the following:(i) Acquisition of property, plant and equipment by means of

hire purchase and finance lease 12(b) 1,797 22,099 — —

(ii) Acquisitions of subsidiary companies via issuance of shares — 717,364 — 717,364

(iii) Acquisitions of subsidiary companies partly paid via disposal of estates 48(i)(b) 341,742 — — —



132

1 PRINCIPAL ACTIVITIES The Company is an investment holding company with investments in the automotive, services (including banking business), and property and infrastructure

segments.

The principal activities of the subsidiary companies, jointly controlled entities and associated companies are described in Note 3 to the financial statements.

There have been no significant changes in these activities during the financial year.

The Directors regard Etika Strategi Sdn. Bhd., a company incorporated in Malaysia, as the holding company.

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Bursa Malaysia Securities Berhad.

the address of the registered office and principal place of business of the company is level 5, Wisma DrB-Hicom, no. 2, Jalan usahawan u1/8, seksyen u1, 40150 Shah Alam, Selangor Darul Ehsan, Malaysia.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following accounting policies, unless otherwise stated below, have been used consistently in dealing with items which are considered material in relation to the

financial statements:

2.1 Basis of preparation The financial statements comply with the provisions of the Companies Act, 1965 and financial Reporting Standards (“fRSs”), the MASB Approved Accounting

Standards in Malaysia for Entities Other than private Entities, modified by the accounting policies set out in the Bank Negara Malaysia Guidelines and Shariah principles for a banking subsidiary company of the Group.

The financial statements of the Group and of the Company are prepared under the historical cost convention except for those that are disclosed in this summary of significant accounting policies.

The preparation of financial statements in conformity with the provisions of the Companies Act, 1965 and financial Reporting Standards, the MASB Approved Accounting Standards in Malaysia for Entities Other than private Entities, modified by the accounting policies set out in the Bank Negara Malaysia Guidelines and Shariah principles for a banking subsidiary, requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. There are no areas involving a higher degree of judgment or complexity, or areas where estimates and assumptions are significant to the financial statements other than as disclosed in Note 54 to the financial statements.

2.2 Changes in accounting policies and effects arising from adoption of revised FRSs The accounting policies and methods of computation adopted during the financial year are consistent with those adopted for the annual audited financial

statements for the financial year ended 31 March 2009.

notes to thefinancial statements

– 31 March 2010


133

notes to the financial statements (continued)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.3 Impact of new MASB pronouncements There are no new accounting standards, amendments to published standards and interpretations to existing standards effective for the Group’s financial year

ended 31 March 2010 and applicable to the Group.

The Group has not adopted the following fRSs that are not mandatory for the current financial year.

(i) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group but not yet effective and have not been early adopted

Revised FRS 3 Business Combinations (effective for Group’s financial year beginning on 1 April 2010). The revised standard continues to apply the acquisition method to business combinations, with some significant changes. for example, all payments to

purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair vale or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed.

FRS 4 Insurance Contracts (effective for Group’s financial year beginning on 1 April 2010). This standard allows an entity to address insurance contracts (including reinsurance contracts) that it issues, reinsurance contracts that it holds and

financial instruments that it issues with a discretionary participation feature.

FRS 7 Financial Instruments: Disclosures (effective for Group’s financial year beginning on 1 April 2010). This new standard requires disclosures of information relating to the significance of financial instruments on an entity’s financial position and performance

and the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the reporting date and how the entity manages those risks. The impact of applying fRS 7 on these financial statements upon its first adoption is not disclosed by virtue of exemption provided under paragraph 44AB of this standard.

FRS 8 Operating Segments (effective for Group’s financial year beginning on 1 April 2010). This new standard replaces fRS 1142004 Segment Reporting and it requires an entity to report financial and descriptive information about its operating

segments on the same basis as those reported internally for evaluating operating segment performance and deciding how to allocate resources to operating segments.

Revised FRS 101 Presentation of Financial Statements (effective for Group’s financial year beginning on 1 April 2010). The revised standard prohibits the presentation of items of income and expenses (that is, ‘non-owner changes in equity’) in the statement of changes in

equity. ‘Non-owner changes in equity’ are to be presented separately from owner changes in equity. All non-owner changes in equity will be required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). where entities restate or reclassify comparative information, they will be required to present a restated balance sheet as at the beginning comparative period in addition to the current requirement to present balance sheets at the end of the current period and comparative period.

FRS 123 Borrowing Costs (effective for Group’s financial year beginning on 1 April 2010). This standard supersedes fRS 1232004 and requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production

of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed.


134

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.3 Impact of new MASB pronouncements (Continued)

(i) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group but not yet effective and have not been early adopted (Continued)

Revised FRS 127 Consolidated and Separate Financial Statements (effective for Group’s financial year beginning on 1 April 2011). This revised standard requires the effects of all transactions with non-controlling interest to be recorded in equity if there is no change in control and

these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised in profit or loss.

FRS 139 Financial Instruments: Recognition and Measurement (effective for Group’s financial year beginning 1 April 2010). This new standard establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial

items. Hedge accounting is permitted only under strict circumstances. The Group will apply this standard when effective. The Group has applied the transitional provision in fRS 139 which exempts entities from disclosing the possible impact arising from the initial application of this standard on the financial statements of the Group.

FRS 140 Investment Property (effective for Group’s financial year beginning 1 April 2010). This standard requires assets under construction/development for future use as investment property to be accounted as investment property rather than

property, plant and equipment. where the fair value model is applied, such property is measured at fair value. However, where fair value is not reliably measurable, the property is measured at cost until the earlier of the date construction is completed and fair value becomes reliably measurable. It also clarifies that if a valuation obtained for an investment property held under lease is net of all expected payments, any recognised lease liability is added back in order to determine the carrying amount of the investment property under the fair value model.

Amendment to FRS 5 Non-current Assets Held for Sale and Discontinued Operations (effective for Group’s financial year beginning on 1 April 2010). This amendment interprets the disclosure of non-current assets (or disposal groups) classified as held for sale or discontinued operations and the treatment

of planning to sell the controlling interest in a subsidiary.

Amendment to FRS 107 Statement of Cash Flows (effective for Group’s financial year beginning on 1 April 2010). This amendment interprets the classification of expenditures on unrecognised assets.

Amendment to FRS 110 Events after the Reporting Period (effective for Group’s financial year beginning on 1 April 2010). This amendment interprets the treatment of dividends declared after the end of the reporting period.

Amendment to FRS 116 Property, Plant and Equipment (effective for Group’s financial year beginning on 1 April 2010). This amendment interprets the definition of recoverable amount and the treatment pertaining to the sale of assets held for rental.

Amendment to FRS 117 Leases (effective for Group’s financial year beginning on 1 April 2010). This amendment interprets the classification of leases of land and buildings.

Amendment to FRS 118 Revenue (effective for Group’s financial year beginning on 1 April 2010). This amendment interprets in the treatment of costs of originating a loan and it determines whether an entity is acting as a principal or as an agent.

Amendment to FRS 120 Accounting for Government Grants and Disclosure of Government Assistance (effective for Group’s financial year beginning on 1 April 2010).

This amendment deals in the treatment of government loans with a below market rate of interest and it is consistent with the terminology used in fRS 108.


135




Amendment to FRS 127 Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate (effective for Group’s financial year beginning on 1 April 2010).

The amendment removes the definition of the cost method and replaces it with a requirement to recognise dividends as income in the separate financial statements of the investor when its right to receive the dividends are established.

Amendment to FRS 128 Investment in Associates (effective for Group’s financial year beginning on 1 April 2010). This amendment requires the disclosures when investment in associates are accounting for at fair value through profit or loss and the treatment of

impairment of investment in an associate.

Amendment to FRS 131 Interests in Joint Ventures (effective for Group’s financial year beginning on 1 April 2010). This amendment requires the disclosures when investment in jointly controlled entities are accounting for at fair value through profit or loss.

Amendments to FRS 132 Financial Instruments: Presentation and FRS 101(revised) Presentation of Financial Statements - Puttable financial instruments and obligations arising on liquidation (effective for Group’s financial year beginning on 1 April 2010).

The amendments require entities to classify puttable financial instruments and instruments that impose on the entity an obligation to deliver to another party a prorata share of the net assets of the entity only on liquidation as equity, if they have particular features and meet specific conditions.

Amendment to FRS 134 Interim Financial Reporting (effective for Group’s financial year beginning on 1 April 2010). This amendment deals in the disclosure of earnings per share in the interim financial reports.

Amendment to FRS 136 Impairment of Assets (effective for Group’s financial year beginning on 1 April 2010). This standard clarifies that the largest cash-generating unit (or group of units) to which goodwill should be allocated for the purposes of impairment testing

is an operating segment before the aggregation of segments with similar economic characteristics. The improvement also clarifies that where fair value less costs to sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for value in use should be made.

IC Interpretation 9 Reassessment of Embedded Derivatives (effective for Group’s financial year beginning on 1 April 2010). This new interpretation requires an entity to assess whether an embedded derivative is required to be separated from the host contract and accounted

for as a derivative when the entity first become a party to the contract. Subsequent reassessment is prohibited unless there is a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract in which case reassessment is required.

IC Interpretation 10 Interim Financial Reporting and Impairment (effective for Group’s financial year beginning on 1 April 2010). This new interpretation does not allow an impairment loss recognised in a previous interim period in respect of goodwill or an investment in either an

equity instrument or a financial asset carried at cost to be reversed at a subsequent balance sheet date.

IC Interpretation 12 Service Concession Arrangements (effective for Group’s financial year beginning on 1 April 2011). This new interpretation prescribes how concession operators should account for the rights and obligations arising from service concession arrangements

with government. Depending on the contractual terms, the interpretation requires the operator to recognise a financial asset if it has an unconditional contractual right to receive cash or an intangible asset if it receives a right (licence) to charge users of the public service. Some contractual terms may give rise to both a financial asset and an intangible asset.


136



IC Interpretation 13 Customer Loyalty Programmes (effective for Group’s financial year beginning on 1 April 2010). This new interpretation clarifies that where goods or services are sold together with a customer loyalty incentive, the arrangement is a multiple-element

arrangement and the revenue in respect of the consideration receivable from the customer is allocated between the components of the arrangement using fair values. The accounting impact to the Group is immaterial.

IC Interpretation 14 FRS 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective for Group’s financial year beginning on 1 April 2010).

This new interpretation provides guidance on assessing the limit in fRS 119 on the amount of the surplus that can be recognised as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement.

IC Interpretation 15 Agreements for the Construction of Real Estate (effective for Group’s financial year beginning on 1 April 2011). This new interpretation supercedes fRS 2012004 and gives a significant impact to the real estate industry; particularly those involved in multiple-unit

developments, such as apartments and condominiums and sell the unit before the construction is completed. It requires the entities to determine whether the sale and purchase agreements are construction service contracts or sale of goods and whether the percentage of completion method is appropriate for some agreements whilst for others, revenue is recognised only at the point the constructed goods are delivered to the customers. The Group is assessing the accounting impact upon the application and adoption of this interpretation.

Amendments to IC Interpretation 9 (effective for Group’s financial year beginning on 1 April 2011). This interpretation does not apply to embedded derivatives in contracts acquired in a business combination, businesses under common control or the

formation of a joint venture.

(ii) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group but not yet effective and are not relevant to the Group

Revised fRS 1 first-time Adoption of financial Reporting Standards IC Interpretation 11 fRS 2 – Group and Treasury Share Transactions IC Interpretation 16 Hedges of a Net Investment in a foreign Operation IC Interpretation 17 Distributions of Non-cash Assets to Owners Amendment to fRS 119 Employee Benefits Amendment to fRS 129 financial Reporting in Hyperinflationary Economies


137


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.4 Basis of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiary companies made up to the end of the financial

year.

Subsidiary companies are those companies in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of more than one half of the voting rights. The Group’s subsidiary companies are listed in Note 3 to the financial statements.

All the subsidiary companies are consolidated using the purchase method of accounting where the results of subsidiary companies acquired or disposed of during the financial year are included from the date on which control is transferred to the Group and are no longer consolidated from the date on which the control ceases. At the date of acquisition, the fair values of the subsidiary companies’ identifiable assets acquired and liabilities and contingent liabilities assumed are determined and these values are reflected in the consolidated financial statements. The cost of an acquisition is measured as fair value of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

The gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and the Group’s share of its net assets including the cumulative amount of any currency exchange differences that relate to the subsidiary company and is recognised in the consolidated income statement.

The total assets and liabilities of subsidiary companies are included in the Group’s balance sheet and the interests of minority shareholders in the net assets

are stated separately. All significant inter-company transactions, balances and unrealised gains on transactions are eliminated on consolidation and unrealised losses on transactions are also eliminated unless cost cannot be recovered.

2.5 Minority interest Minority interest represents the portion of profit or loss and net assets in subsidiary companies not held by the Group. Minority interest is initially measured at

the minorities’ share of fair values of the identifiable assets and liabilities of the acquiree at the date of acquisition.

The Group applies a policy of treating acquisition/disposal of shares from/to minority interest as transactions with parties external to the Group. Gains and losses resulting from disposal of shares in subsidiary companies to minority interest are recorded in the income statement. purchases from minority interest result in goodwill, being the difference between any considerations paid and the relevant share of the carrying value of net assets of the subsidiary acquired.

2.6 Jointly controlled entities A jointly controlled entity is an enterprise which is neither a subsidiary company nor an associated company of the Group but over which there is a contractually

agreed sharing of control by the Group with one or more parties over the strategic operating, investing and financial policy decisions. The decisions require the unanimous consent of the parties sharing control.

The Group’s share of results of jointly controlled entities is included in the consolidated income statement using the equity method of accounting. In the consolidated balance sheet, the Group’s interest in jointly controlled entities is stated at cost plus the Group’s share of post acquisition retained profits and reserves less impairments. where necessary, adjustments are made to the financial statements of jointly controlled entities to ensure consistency of accounting policies with those of the Group.

The Group’s jointly controlled entities are listed in Note 3 to the financial statements.


138

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.7 Associated companies An associated company is a company in which the Group is in a position to exercise significant influence in its management but which is does not control and

is neither a subsidiary company nor a jointly controlled entity. Significant influence is the power to participate in the financial and operating policy decisions of the associated company but not control over those policies.

The Group’s share of results of associated companies is included in the consolidated income statement using the equity method of accounting. The share of the results of the associated company will not be taken into the Group’s income statement when the carrying value of the investment in an associated company reaches zero unless the Group has incurred obligations or guaranteed obligations in respect of the associated company. In the consolidated balance sheet, the Group’s interest in associated companies is stated at cost plus the Group’s share of post acquisition retained profits and reserves less impairment. where necessary, adjustments are made to the financial statements of associated companies to ensure consistency of accounting policies with those of the Group.

The Group’s associated companies are listed in Note 3 to the financial statements.

2.8 Investments• Subsidiary companies, jointly controlled entities and associated companies Investments in subsidiary companies, jointly controlled entities and associated companies are stated at cost. where an indication of impairment exists, the

carrying amount of the investment is assessed and written down immediately to its recoverable amount.

• Marketable securities Quoted investments are stated at the lower of cost and market value, determined on an aggregate portfolio basis by category of investments, except that if

diminution in value of a particular non-current investment is not regarded as temporary, a write-down to average median market value is made against the value of that investment. Market value is determined by reference to the stock exchange closing price at the balance sheet date.

• Other investments(i) Investments held by insurance subsidiary companies

(a) Investments in Malaysian Government Securities, Cagamas papers and other approved debt securities as specified by Bank Negara Malaysia, are stated at cost, adjusted for the amortisation of premiums or the accretion of discounts calculated on a constant yield basis over the period from the date of purchase to maturity date except where there is an indication of impairment, the investment is written-down to its net realisable value. The amortisation of premiums and accretion of discounts are recognised in the income statement and/or revenue account.

(b) unquoted investments are stated at cost and an allowance for diminution in value is made where, in the opinion of the Directors, there is a decline other than temporary in the value of such investments. where there has been a decline other than temporary in the value of an investment, such a decline is recognised as an expense in the income statement in the period in which the decline is identified.

(ii) Investments held by a banking subsidiary company(a) Investments held-for-trading Investments are classified as held-for-trading if they are acquired principally for the purpose of benefiting from actual or expected short-term

price movement or to lock in arbitrage profits. The investments held-for-trading will be stated at fair value and any gain or loss arising from a change in their values and derecognition of these investments are recognised in the income statements.


139


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.8 Investments (Continued)

• Other investments (Continued)(ii) Investments held by a banking subsidiary company (Continued)

(b) Investments available-for-sale Investments available-for-sale are financial assets that are not classified as held-for-trading or held-to-maturity. The investments available-for-sale

are measured at fair value or at amortised cost (less impairment losses) if the fair value cannot be reliably measured. Any gain or loss arising from a change in fair value are recognised directly in equity through the statement of changes in equity, until the financial asset is sold, collected, disposed of or impaired, at which time the cumulative gain or loss previously recognised in equity will be transferred to the income statement.

(c) Investments held-to-maturity Investments held-to-maturity are financial assets with fixed or determinable payments and fixed maturity that the banking subsidiary company

have the positive intent and ability to hold to maturity. The investments held-to-maturity are measured at accreted/amortised cost based on effective yield method. Amortisation of premium, accretion of discount and impairment as well as gain or loss arising from derecognition of investments held-to-maturity are recognised in the income statement.

The estimated fair values for investments held-for-trading and investments available-for-sale are based on quoted and observable market prices at the balance sheet date. where such quoted and observable market prices are not available, fair value is estimated using pricing models or discounted cash flow techniques. where discounted cash flow technique is used, the estimated future cash flows are discounted based on current market rates for similar instruments at the balance sheet date.

(iii) Others Other investments are shown at cost and an allowance for diminution in value is made, where in the opinion of the Directors, there is a decline other

than temporary in the value of such investments. where there has been a decline other than temporary in the value of an investment, such a decline is recognised as an expense in the income statement in the period in which the decline is identified.

On disposal of investment, the difference between the net disposal proceeds and its carrying amount is charged or credited to the income statement.

2.9 Investment properties Investment properties comprise land and buildings that are held for long term rental yield and/or for capital appreciation and that are not occupied by the

companies in the Group. Investment properties are stated at fair value, representing open-market values determined annually by external valuers. fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. Gains or losses arising from changes in the fair values of investment properties are recognised in the income statement.

On disposal of an investment property, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal, it shall be derecognised (eliminated from the balance sheet). The difference between the net disposal proceeds and the carrying amount is recognised in the income statement in the period of the retirement or disposal.

2.10 Non-current assets held for sale Non-current assets are classified as held for sale and stated at the lower of carrying amount and fair value less cost to sell if their carrying amount will be

recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary.


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.11 Biological assets Biological assets comprise new planting expenditure incurred up to the point of harvesting. This expenditure is capitalised and is not amortised, unless a different

crop is planted on the existing land area, in which case the amount is written off in the year when the different crop is planted. where the cost of new planting is incurred on leasehold land which has an unexercised period shorter than the crop’s economic life, the cost is amortised over the remaining period of the lease on a straight line basis. Replanting expenditure, which represents cost incurred in replanting old planted areas, is charged to income statement in the year in which it is incurred.

2.12 Property, plant and equipment and depreciation freehold land is not depreciated as it has an infinite life. Depreciation on assets under construction commences when the assets are ready for their intended

use. All other property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are recognised in the income statement.

where an indication of impairment exists, the carrying amount of the property, plant and equipment is assessed and written down immediately to its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. At each balance sheet date, the Group assesses whether there is any indication of impairment.

The estimated useful lives in years are as follows:

Buildings, golf course and improvements 3 – 98 years plant and machinery 5 – 30 years Motor vehicles 3 – 10 years Office equipment 3 – 10 years furniture and fittings 3 – 20 years

Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each balance sheet date.

2.13 Prepaid lease properties leasehold land that normally has a finite economic life and title is not expected to pass to the lessee by the end of the lease term is treated as an operating

lease. The payment made on entering into or acquiring a leasehold land is accounted as prepaid lease properties that are amortised over the lease term in accordance with the pattern of benefits provided. Short term leases are below 50 years and long term leases are above 50 years.


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.14 Goodwill Goodwill represents the excess of the cost of acquisition of subsidiary companies, jointly controlled entities and associated companies over the fair value of the

Group’s share of the identifiable net assets at the time of acquisition. Goodwill on acquisitions of subsidiary companies is included in the balance sheet as intangible assets. If the cost of acquisition is less than the fair value of the net assets of the subsidiary company acquired, the difference is recognised directly in the income statement.

Goodwill arising on the acquisition of subsidiary companies is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the synergies of the business combination in which the goodwill arose. The Group allocates goodwill to each business segment in which it operates.

Goodwill on acquisitions of jointly controlled entities and associated companies is included in investment in jointly controlled entities and associated companies respectively. Such goodwill is tested for impairment as part of the overall balance.

2.15 Intangible assets other than goodwill(i) Plant and assembly licenses and expenses incurred for development of products plant and assembly licences and expenses incurred for development of products are considered to have finite useful lives, and are amortised equally over

the period of their expected benefit or charged to income statement in the financial year in which the related plant or product is abandoned or considered to be of no value.

(ii) Computer software Costs that are directly associated with identifiable and unique software products which have probable benefits exceeding the cost beyond one year are

recognised as intangible assets. Expenditure which enhances or extends the performance of computer software programmes beyond their original specifications is recognised as a capital movement and added to the original cost of the software.

Costs associated with maintaining computer software programmes are recognised as an expense when incurred. Costs include employee costs incurred as a result of developing software and an appropriate portion of relevant overheads.

Computer software costs recognised as intangible assets are carried at cost and are amortised on a straight line basis over their estimated useful lives of 1 - 5 years.

(iii) Concession for the operation and maintenance of a power plant Concession for the operation and maintenance of a power plant is recognised as an intangible asset. The concession is carried at cost and amortised on

a straight line basis over the remaining concession period of approximately 22 years.

(iv) Core deposits of a banking subsidiary company Core deposits are carried at cost and amortised on a straight line basis over a period of 5 years.

where an indication of impairment exists, the carrying amount of the intangible assets is assessed and written down immediately to its recoverable amount.

preliminary and pre-operating expenses are written off to the income statement in the financial year in which they are incurred.


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.16 Property development activities

(i) Land held for property development land held for property development consist of land on which no significant development work has been undertaken or where development activities are

not expected to be completed within the normal operating cycle. Such land is classified as non-current asset and is stated at cost less accumulated impairment losses.

Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, conversion fees and other relevant levies. where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount.

land held for property development is transferred to property development costs (within current assets) when development work is to be undertaken and is expected to be completed within the normal operating cycle.

On disposal of land held for property development, the difference between the net disposal proceeds and its carrying amount is charged or credited to the income statement.

(ii) Property development costs where the outcome of a development can be reliably estimated, property development revenue and expenditure are recognised using the percentage of

completion method. The percentage of completion is measured by reference to the development costs incurred to date in proportion to the estimated total costs for the property development.

where the outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of costs incurred that is probable will be recoverable. property development costs on development units sold are recognised as an expense when incurred.

Irrespective of whether the outcome of a property development activity can be estimated reliably, when it is probable that total property development costs will exceed total property development revenue, the expected loss is recognised as an expense immediately.

property development costs not recognised as an expense is recognised as an asset and are stated at lower of cost and net realisable value. where revenue recognised in the income statement exceeds billings to purchasers, the balance is shown as accrued billings under receivables (within current assets). where billings to purchasers exceed revenue recognised, the balance is shown as progress billings under payables (within current liabilities).

Revenue and profit from completed properties is recognised in accordance with the terms of the sale and purchase agreements.

2.17 Inventories Inventories are stated at the lower of cost and net realisable value.

(i) Raw materials, work-in-progress, finished goods and consumables Raw materials and consumables are stated at cost. work-in-progress and finished goods represent raw materials, direct labours, direct charges and

allocated process costs, where necessary. Cost is principally determined on a first-in, first-out basis.

(ii) Inventories of unsold properties The cost of unsold properties comprises cost associated with the acquisition of land, direct costs and an appropriate allocation of allocated costs

attributable to property development activities.

Net realisable value is the estimated selling price in the ordinary course of business less the costs of completion and selling expenses.


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.18 Receivables Other than financing of customers in relation to a banking subsidiary company as stated below, receivables are carried at anticipated realisable value. An

estimate is made for doubtful receivables based on a review of all outstanding amounts at the financial year end. Bad debts are written off in the financial year in which they are identified.

financing of customers of a banking subsidiary company are stated after deducting allowance for possible losses. Specific allowances are made for impaired financing, which have been individually reviewed and specifically identified as substandard, doubtful or bad.

A general allowance based on a percentage of the financing portfolio is also made. These percentages are reviewed annually in light of past experiences and prevailing circumstances and an adjustment is made to the overall general allowances, if necessary.

Any uncollectible financing or portion of a financing classified as bad is written off after taking into consideration the realisable value of collateral, if any, when in the judgement of the directors, there is no prospect of recovery.

Specific allowance provided for impaired financing on the following basis which is in compliance with the Bank Negara Malaysia (“BNM”)/Gp3:

(i) assigning twenty percent (20%) for non-performing financing which are more than 3 months-in-arrears;

(ii) assigning fifty percent (50%) for non-performing financing in arrears of 6 months; and

(iii) assigning a hundred percent (100%) for non-performing financing in arrears of 9 months and above.

Additional allowances for impaired financing are provided when the recoverable amount is lower than the net book value of financing (outstanding amount of financing, net of specific allowances) and long outstanding non-performing financing on the following basis:

(i) assigning fifty percent (50%) of the force sale value of the properties held as collateral for non-performing financing which are outstanding for more than 5 years but less than 7 years; and

(ii) no value will be assigned for the collateral of non-performing financing which are outstanding for 7 years and above.

Any allowance made during the year is charged to the income statement.

BNM has granted indulgence to the banking subsidiary from complying with the requirement on the impairment of financing under BNM’s Guidelines on financial Reporting for licensed Islamic Banks (“BNM/Gp8-i”) for the current and previous years. The variation is only on the classification of financing as non-performing whereby under BNM/Gp8-i, the repayment in arrears are for more than six (6) months compared to banking subsidiary’s practice of three (3) months.

financing are classified as non-performing and sub-standard when repayments are in arrears for more than three (3) months from the first day of defaults or after maturity date.

The specific allowance for doubtful debts and financing of the banking subsidiary are computed based on the requirements of BNM/Gp3, which is consistent with the adoption made in the previous audited financial statements.


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.19 Cash and cash equivalents for the purposes of the cash flow statements, cash and cash equivalents consist of cash in hand, bank balances, demand deposits, bank overdrafts, short term

and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

2.20 Income taxes Income tax on the profit or loss for the financial year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect

of the taxable profit for the financial year and is measured using the tax rates that have been enacted at the balance sheet date.

Deferred tax is provided for in full, using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities for tax purposes and their carrying amounts in the financial statements. Deferred tax is not recognised if the temporary difference arises from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax assets are recognised to the extent that is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantially enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill.

2.21 Share capital(i) Classification Ordinary shares are classified as equity.

(ii) Share issue costs Incremental external costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

(iii) Dividends to shareholders of the Company Dividends on ordinary shares are recognised as liabilities when declared before the balance sheet date. Dividends proposed after the balance sheet date,

but before the financial statements are authorised for issue, is not recognised as a liability at the balance sheet date. upon the dividend becoming payable, it will be accounted for as a liability.

2.22 Borrowings(i) Classification Borrowings are initially recognised based on the proceeds received, net of transaction costs incurred. In subsequent periods, borrowings are stated at

amortised cost using the effective yield method; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings.

(ii) Capitalisation of borrowing costs Borrowing costs incurred to finance the construction of property, plant and equipment are capitalised as part of the cost of the asset during the period

of time that is required to complete and prepare the asset for its intended use. Borrowing costs incurred to finance property development activities and construction contracts are accounted for in a similar manner. All other borrowing costs are expensed.


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.23 Provisions

(i) Warranty and sales returns A provision is made for the estimated liability on all products still under warranty and provision for sales returns is made for estimated returns of goods

as at the balance sheet date. These provisions are arrived at based on service and sales returns historical data.

(ii) Restructuring, mutual separation schemes and voluntary separation scheme costs Restructuring, mutual separation scheme and voluntary separation scheme provisions mainly comprise employee termination costs and other related costs

and are recognised in the financial year in which the Group becomes legally or constructively committed to payment.

(iii) Provision for claims in relation to a general insurance subsidiary company Claims liabilities are determined based on the estimated ultimate cost of all claims incurred but not settled at the balance sheet date, inclusive of provisions

for claims yet to be reported. The liabilities are net of recoveries and including related claims handling costs.

Delays can be experienced in the notification as well as in the development and settlement of claims; therefore the ultimate cost of these claims cannot be ascertained with exact certainty at the balance sheet date.

An independent actuary computes the liability using a set of standard actuarial projection methods based on empirical data, current assumptions and discussions with management on the company’s current business, underwriting and claims processes.

The liability as determined by the actuary is inclusive of a regulatory risk margin for adverse deviation. No discount for the time value of money is applied to the liability.

(iv) Provision for claims in relation to a life insurance subsidiary company Claims and settlement costs that are incurred during the financial year are recognised when a claimable event occurs and/or the insurer is notified.

Recoveries on reinsurance claims are accounted for in the same financial year as the original claims are recognised.

Claims and provisions for claims arising on life insurance policies including settlement costs, less reinsurance recoveries, are accounted for using the case basis method and for this purpose, the benefits payable under a life insurance policy are recognised as follows:

(a) maturity or other policy benefit payments due on specified dates are treated as claims payable on the due dates; and

(b) death, surrender and other benefits without due dates are treated as claims payable, on the date of receipt of intimation of death of the assured or occurrence of contingency covered.

The benefits payable under investment-linked businesses are in respect of net cancellation of units and are recognised as surrender.


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.24 Employee benefits

(i) Short term employee benefits wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the period in which the associated services are

rendered by employees of the Group and Company.

(ii) Defined contribution plan A defined contribution plan is a pension plan under which the Group and Company pay fixed contributions into a separate entity (a fund) and will have

no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior periods.

The Group’s and Company’s contributions to the defined contribution plan are charged to the income statement in the period to which they relate. Once the contributions have been paid, the Group and Company have no further payment obligations.

(iii) Termination benefits Termination benefits are payable to an entitled employee whenever the employment has to be terminated before the normal retirement date or when the

employee accepts mutual/voluntary separation in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.

2.25 General insurance underwriting results The general insurance underwriting results are determined for each class of business after taking into account reinsurances, commissions, premium liabilities

and claims liabilities.

Premium liabilities premium liabilities refer to the higher of:

(a) the aggregate of the unearned premium reserves (“upR”); or

(b) the best estimate value of the insurer’s unexpired risk reserves (“uRR”) at the valuation date and the provision of Risk Margin for Adverse Deviation (“pRAD”) calculated at the overall general insurance company level. The best estimate value is a prospective estimate of the expected future payments arising from future events insured under policies in force as at the valuation date and also includes allowance for the insurer’s expenses, including overheads and cost of reinsurance, expected to be incurred during the unexpired period in administering these policies and settling the relevant claims, and allows for expected future premium refunds.


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.25 General insurance underwriting results (Continued) Unearned premium reserves upR represents the portion of the net premiums of insurance policies written that relate to the unexpired periods of the policies at the end of the financial

year.

In determining the upR at the balance sheet date, the method that most accurately reflects the actual unearned premium is used, as follows:

(i) 25% method for marine cargo, aviation cargo and transit;

(ii) 1/24th method for all other classes of Malaysian general policies reduced by the percentage of accounted gross direct business commissions to the corresponding premiums, not exceeding limits specified by BNM;

(iii) 1/8th method for all other classes of overseas inward business with a deduction of 20% for acquisition costs; and

(iv) time appointment method for policies with insurance periods other than 12 months.

Acquisition costs The cost of acquiring and renewing insurance policies net of income derived from ceding reinsurance premiums is recognised as incurred and properly allocated

to the periods in which it is probable they give rise to income.

2.26 Life insurance underwriting results The surplus transferable from the life insurance fund to the income statement is based on the surplus determined by an annual actuarial valuation of the long

term liabilities to policyholders, made in accordance with the provisions of the Insurance Act, 1996 and related regulations by the appointed actuary. In the event the actuarial valuation indicates that a transfer is required from the Shareholders’ fund, the transfer from the income statement to the life insurance fund is made in the financial year of the actuarial valuation.

In the consolidated financial statements, all life insurance underwriting results are reflected through movements in the life assurance fund.

Premium income premium income includes premium recognised in the life fund and the investment-linked funds.

premium income of the life fund is recognised as soon as the amount of the premium can be reliably measured. first premium is recognised from inception date and subsequent premium is recognised when it is due.

At the end of the financial year, all due premiums are accounted for to the extent that they can be reliably measured.

Outward reinsurance premiums are recognised in the same accounting period as the original policies to which the reinsurance relates.

premium income of the investment-linked funds is in respect of the net creation of units which represents premiums paid by policyholders as payment for a new contract or subsequent payments to increase the amount of that contract. Net creation of units is recognised on a receipt basis.

Commission and agency expenses Commission and agency expenses, which are costs directly incurred in securing premium on insurance policies, net of income derived from reinsurers in the

course of ceding of premium to reinsurers, are charged to the life insurance revenue account in the financial year in which they are incurred.


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.27 Construction contracts when the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised over the period of the contract as

revenue and expenses respectively. The Group uses the percentage of completion method to determine the appropriate amount of revenue and costs to be recognised in a given period; the percentage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total costs.

when it is probable that the total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

when the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that is probable will be recoverable and contract costs are recognised as expenses when incurred.

The aggregate of the costs incurred and the profit/loss recognised on each contract is compared against the progress billings periodically. where costs incurred and recognised profit (less recognised losses) exceeds progress billings, the balance is shown as amounts due from customers on construction contracts under current assets. where progress billings exceed costs incurred plus recognised profit (less recognised losses), the balance is shown as amounts due to customers on construction contracts under current liabilities.

2.28 Assets under lease arrangements(i) Finance leases leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases.

Assets acquired under finance lease arrangements are included in property, plant and equipment and the capital element of the leasing commitments is shown under borrowings. The lease rentals are treated as consisting of capital and interest element. The capital element is applied to reduce the outstanding obligations and the interest element is charged to income statement so as to give a constant periodic rate of interest on the outstanding liability at the end of each accounting period. Assets acquired under finance lease are depreciated over the useful lives of equivalent owned assets or its lease term, if shorter.

(ii) Operating leases leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. lease

rental payments on operating leases are charged to the income statement in the financial year they become payable.

when an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

2.29 Revenue recognition Other than revenue recognition policies mentioned elsewhere in the summary of significant accounting policies, set out below are other significant revenue

recognition policies used by the Group:

(i) Sale of goods Sales are recognised upon delivery of goods, net of sales tax, returns, discounts and allowances.


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.29 Revenue recognition (Continued)

(ii) Rendering of services(a) Solid waste management Revenue from management services, solid waste disposal and tipping fees is recognised upon performance of services less discounts.

(b) Vehicle inspection income Income from inspection of vehicles is recognised upon the rendering of inspection services.

(c) Ground handling services Revenue from ground handling, inflight catering and cargo handling is recognised upon performance of services less discounts.

(d) Premium income of a general insurance subsidiary company premium income is recognised in a financial year in respect of risks assumed during that particular financial year. premiums from direct business

are recognised during the financial year upon the issuance of insurance policies. premiums in respect of risks incepted for which policies have not been issued as of the balance sheet date are accrued at that date.

Inward treaty reinsurance premiums are recognised on the basis of periodic advices received from ceding insurers.

Outward reinsurance premiums are recognised in the same accounting period as the original policy to which the reinsurance relates.

(e) Operation and maintenance of a power plant Revenue from operation and maintenance is recognised upon performance of services less discounts.

(f) Fee and other income recognition for a banking subsidiary company financing arrangement, management and participation fees, underwriting commissions and brokerage fees are recognised as income based on

contractual arrangements. Guarantee fee is recognised as income upon issuance of the guarantee. fees from advisory and corporate finance activities are recognised net of service taxes and discounts on completion of each stage of the assignment.

(iii) Others(a) Income from financing of a banking subsidiary company Income from financing of customers is recognised based on the constant rate of return method. Income includes the amortisation of premium and

accretion of discount. Income from investments is recognised on an effective yield basis.

where a customer’s financing account is classified as non-performing, income is suspended until it is realised on a cash basis. financing income recognised prior to the non-performing classification is treated as uncollectible, thus an additional amount of specific allowance is made. Customers’ accounts are classified as non-performing where repayments are in arrears for more than three months from the first day of default for financing; and three months from the first day of default for trade bills, bankers acceptances, trust receipts and other instruments of similar nature.

(b) Dividend income Dividends are recognised when the Group’s right to receive payment is established.


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.30 Foreign currency translation Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the

entity operates (the “functional currency”). The financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional and presentation currency.

Transactions in foreign currencies during the financial year are converted into functional currency at the rates of exchange ruling on the transaction dates. Monetary assets and liabilities in foreign currency are translated into Ringgit Malaysia at rates of exchange approximating those ruling on the balance sheet date. Exchange gains and losses are dealt with in the income statement.

The assets and liabilities of foreign subsidiary companies that have a functional currency other than RM are translated into Ringgit Malaysia at the rate of exchange ruling at the balance sheet date. Income and expenses are translated at average exchange rates. Exchange differences are recognised in the statement of changes in equity as currency translation reserves.

On disposal of foreign subsidiary companies, such translation differences are recognised in the income statement as part of the gain or loss on disposal.

2.31 Banking related liabilities Deposits from customers, deposits and placement of banks and financial institutions are stated at placement values. Bills and acceptances payables represent

the banking subsidiary company’s own bills and acceptances rediscounted and outstanding in the market.

2.32 Financial instruments Description A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another

enterprise.

A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable, or an equity instrument of another enterprise.

A financial liability is any liability that is a contractual obligation to deliver cash or other financial asset to another enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable.


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.32 Financial instruments (Continued) Financial instruments recognised on the balance sheet The particular recognition and measurement method for financial instruments recognised on the balance sheet is disclosed in the individual policy statements

associated with each item.

All derivatives financial instruments relating to a banking subsidiary company including profit rate and foreign currency swaps are measured at fair value and are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Any gain or loss arising from a change in the fair value of the derivatives is recognised in the income statement unless they are part of a hedging relationship which qualifies for hedge accounting where the gain or loss is recognised as follows:

(i) Fair value hedge where a derivative financial instrument hedges the changes in fair value of a recognised asset or liability, any gain or loss on the hedging instrument is

recognised in the income statement. The hedged item is also stated at fair value in respect of the risk being hedged, with any gain or loss being recognised in the income statement.

(ii) Cash flow hedge Gains and losses on the hedging instrument, to the extent that the hedge is effective, are deferred in a separate component of equity. The ineffective part

of any gain or loss is recognised in the income statement. The deferred gains and losses are released to the income statement in the periods when the hedged item affects the income statement.

Financial instruments not recognised on the balance sheet Exchange gains and losses arising on forward foreign exchange contracts entered into as hedges of anticipated future transactions are deferred until the date

of such transactions, at which time they are included in the measurement of such transactions.

Fair value estimation The fair value of publicly traded financial instruments is based on quoted market prices at the balance sheet date. The fair value of forward foreign exchange

contracts is determined using forward exchange market rates at the balance sheet date.

In assessing the fair value of non-traded financial instruments, the Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Techniques such as estimated discounted value of future cash flows, are used to determine fair value. In particular, the fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rate available to the Group for similar financial instruments.

The carrying value of financial assets and liabilities of the Group at the balance sheet date approximated their fair value except as disclosed in the relevant notes to the financial statements.

The carrying values for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values.


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.33 Segment reporting Segment reporting is presented for enhanced assessment of the Group’s risks and returns. Business segments provide products or services that are subject to

risk and returns that are different from those of other business segments.

Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, expense, assets and liabilities are determined before intragroup balances and intragroup transactions are eliminated as part of the consolidation process, except to the extent that such intragroup balances and transactions are between group enterprises within a single segment.

2.34 Contingent liabilities and contingent assets The Group does not recognise a contingent liability but disclosed its existence in the financial statements. A contingent liability is a possible obligation that arises

from past events whose existence will be confirmed by uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group. The Group does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.

In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are measured initially at their fair value at the acquisition date.

3 COMPANIES IN THE GROUP The principal activities of the companies in the Group and the effective interest of the Group as at 31 March 2010 therein are shown below:

Effective Equity Financial Name of Company Interest Principal Activities Year End

2010 2009 % %

SUBSIDIARY COMPANIES

Subsidiary companies of DRB-HICOM Berhad:

Gadek (Malaysia) Berhad 100.00 100.00 Investment holding 31 March

HICOM Holdings Berhad 100.00 100.00 Investment holding 31 March

PusPAKom sdn. Bhd. (“PusPAKom”) 100.00 100.00 Inspection of commercial vehicles for roadworthiness 31 March

DRB-HICOM Defence Technologies Sdn. Bhd. 100.00 100.00 Manufacture, supply, maintenance marketing, 31 March refurbishment or retrofitting of military and commercial vehicles, equipment and spare parts


153


3 COMPANIES IN THE GROUP (CONTINUED) Effective Equity Financial Name of Company Interest Principal Activities Year End

2010 2009 % %

SUBSIDIARY COMPANIES (Continued)

Subsidiary companies of DRB-HICOM Berhad: (Continued)

DRB-HICOM Auto Solutions Sdn. Bhd. 100.00 100.00 Vehicle importation, vehicle pre-delivery inspection 31 March and value added services for provision of logistics and related services to vehicles

* Rangkai positif Sdn. Bhd. 100.00 100.00 Operations and maintenance services of a power plant 31 March

$ HICOM university College Sdn. Bhd. 100.00 — Higher educational and vocational training institution 31 March

* Bank Muamalat Malaysia Berhad 70.00 70.00 Islamic banking business and related financial services 31 March

Motosikal Dan Enjin Nasional Sdn. Bhd. (“MODENAS”) 70.00 70.00 Manufacture, assemble and distribute motorcycles, 31 March related spare parts and accessories

* Hicomobil Sdn. Bhd. 100.00 100.00 Dormant 31 March

intrakota Komposit sdn. Bhd. 70.00 70.00 Dormant 31 March

DRB-HICOM Export Corporation Sdn. Bhd. 71.65 71.65 Dormant 31 March

Subsidiary company of DRB-HICOM Defence Technologies Sdn. Bhd.:

Defence Services Sdn. Bhd. 100.00 100.00 Specialised defence engineering works including 31 March refurbishment and upgrading of armoured vehicles

Subsidiary companies of Gadek (Malaysia) Berhad:

Mega Consolidated Sdn. Bhd. 100.00 100.00 Investment holding 31 March

uni.Asia Capital Sdn. Bhd. 51.00 51.00 Investment holding 31 March

* ladang Gadek Development Sdn. Bhd. 100.00 100.00 Cultivation and marketing of oil palm. Estate 31 March disposed as at 31 March 2010

* ladang Kupang Development sdn. Bhd. 100.00 100.00 Cultivation and marketing of rubber and oil palm. 31 March Estate disposed as at 31 March 2010


154


2010 2009 % %


Subsidiary companies of Uni.Asia Capital Sdn. Bhd.:

uni.Asia life Assurance Berhad 51.00 51.00 underwriting of life insurance business including 31 March investment-linked business

uni.Asia General Insurance Berhad 34.73 34.73 underwriting of all classes of general insurance business 31 March

Subsidiary companies of PUSPAKOM:

puspakom Teknik Sdn. Bhd. 100.00 100.00 Supply and maintenance of automobile associated 31 March equipment

flora Areana Sdn. Bhd. 100.00 100.00 Investment holding 31 March

Subsidiary company of Flora Areana Sdn. Bhd.:

Multi Automotive Service and Assist Sdn. Bhd. 55.00 55.00 Membership recruitment, providing vehicle assistance 31 March and supply of auto related products and services

Subsidiary company of MODENAS:

Edaran Modenas Sdn. Bhd. 70.00 70.00 Distribution of motorcycles, related spare parts and 31 March accessories and servicing of motorcycles

Subsidiary companies of Bank Muamalat Malaysia Berhad:

* Muamalat Venture Sdn. Bhd. 70.00 70.00 Islamic venture capital 31 March

* Muamalat Invest Sdn. Bhd. 70.00 70.00 provision of fund management services 31 March

* Muamalat Nominees (Tempatan) Sdn. Bhd. 70.00 70.00 Dormant 31 March

* Muamalat Nominees (Asing) Sdn. Bhd. 70.00 70.00 Dormant 31 March


155



2010 2009 % %


Subsidiary companies of HICOM Holdings Berhad:

HICOM Berhad 100.00 100.00 Management of projects, rental of properties and 31 March investment holding

HICOM Diecastings Sdn. Bhd. 100.00 100.00 Manufacturing and supplying diecast parts for 31 March motorcycles, automobiles and other applications

HICOM Engineering Sdn. Bhd. 100.00 100.00 Manufacturing casted and machined parts and 31 March components

uSf-HICOM Holdings Sdn. Bhd. 100.00 100.00 Investment holding 31 March

Automotive Corporation Holdings Sdn. Bhd. 100.00 100.00 Investment holding 31 March

HICOM Builders Sdn. Bhd. 100.00 100.00 property investment and development, 31 March civil engineering and building construction

Desa puchong Sdn. Bhd. 100.00 100.00 Cultivation of oil palm and property development. 31 March Estate disposed as at 31 March 2010

Kl Airport services sdn. Bhd. 100.00 100.00 Superintendent of airport’s operation systems and 31 March provision of related ground handling, inflight catering, cargo handling and warehousing space services

HICOM polymers Industry Sdn. Bhd. 100.00 100.00 Distribution of automotive and industrial after-market 31 March products

* NSE Development Sdn. Bhd. 100.00 100.00 Cultivation and marketing of oil palm. Estate disposed 31 March as at 31 March 2010

* Bukit Kledek Development sdn. Bhd. 100.00 100.00 Cultivation and marketing of rubber and oil palm. 31 March Estate disposed as at 31 March 2010

HICOM Technical and Engineering Services Sdn. Bhd. 100.00 100.00 Dormant 31 March


156


2010 2009 % %


Subsidiary companies of HICOM Holdings Berhad: (Continued)

HICOM Vertex Sdn. Bhd. 100.00 100.00 Dormant 31 March

Glenmarie Development (pahang) Sdn. Bhd. 100.00 100.00 Dormant 31 March (formerly known as HICOM Dewan Development Sdn. Bhd.)

Edaran Otomobil Nasional Berhad (“EON”) 79.05 79.05 Marketing of proton motor vehicles, related spare parts 31 March and servicing of vehicles

* Scott & English (Malaysia) Sdn. Bhd. 70.00 70.00 Importation, distribution and servicing of industrial, 31 March marine and engineering products

Comtrac Sdn. Bhd. 70.00 70.00 Construction works and the provision of projects and 31 March development management services

Oriental Summit Industries Sdn. Bhd. 70.00 70.00 Contract manufacturing of motorcycle and automobile 31 March parts and components

* Scott & English Electronics Holdings Sdn. Bhd. 70.00 70.00 Investment holding 31 March

pHN Industry Sdn. Bhd. 62.50 62.50 Manufacturing stamped metal parts, sub-assembly of 31 March automotive components for the motor industry and design and manufacture of dies

Alam flora Sdn. Bhd. 60.53 60.53 Management of integrated solid waste 31 March

proton City Development Corporation Sdn. Bhd. 60.00 60.00 property development, civil and building construction 31 March

HICOM-Teck See Manufacturing Malaysia Sdn. Bhd. 51.00 51.00 Manufacture and sale of thermo plastic and thermo 31 March setting products

HICOM petro-pipes Sdn. Bhd. 51.00 51.00 Dormant 31 March


157



2010 2009 % %


Subsidiary companies of HICOM Berhad:

* Glenmarie properties Sdn. Bhd. 100.00 100.00 Investment holding 31 March (formerly known as HICOM Properties Sdn. Bhd.)

* Connemara Development Sdn. Bhd. 100.00 100.00 Dormant 31 March

HB property Development Sdn. Bhd. 100.00 100.00 property investment 31 March

* HICOM Megah Sdn. Bhd. 92.46 92.46 Investment holding 31 March

Glenmarie Cove Development Sdn. Bhd. 89.50 89.50 Investment holding and property development 31 March

Subsidiary company of HICOM-Teck See Manufacturing Malaysia Sdn. Bhd.:

@* HICOM Automotive plastics (Thailand) ltd. 50.99 50.99 Manufacture of plastic injected parts and plastic 31 March injection moulds for automotive industry

Subsidiary company of USF-HICOM Holdings Sdn. Bhd.:

* uSf-HICOM (Malaysia) Sdn. Bhd. 100.00 100.00 Sale of motor vehicles and their related spare parts 31 March and accessories

Subsidiary company of Automotive Corporation Holdings Sdn. Bhd.:

Automotive Corporation (Malaysia) Sdn. Bhd. 100.00 100.00 Sale of motor vehicles and their related spare parts 31 March and accessories

Subsidiary company of USF-HICOM (Malaysia) Sdn. Bhd.:

* HICOM premier Malaysia Sdn. Bhd. 100.00 100.00 Dormant 31 March


158


2010 2009 % %


Subsidiary company of HICOM Premier Malaysia Sdn. Bhd.:

* Euro Truck & Bus (Malaysia) Sdn. Bhd. 100.00 100.00 Dormant 31 March

Subsidiary company of KL Airport Services Sdn. Bhd.:

KlAs engineering services sdn. Bhd. 100.00 100.00 provision of aircraft maintenance, engineering and 31 March custom forwarding agent services

Subsidiary company of HICOM Builders Sdn. Bhd.:

Imatex Management Services Sdn. Bhd. 100.00 100.00 provision of management services 31 March

Subsidiary companies of Automotive Corporation (Malaysia) Sdn. Bhd.:

Auto prominence (M) Sdn. Bhd. 100.00 100.00 Dormant 31 March

HICOM Automotive Manufacturers (Malaysia) Sdn. Bhd. 93.00 93.00 Assembly of motor vehicles and other road transport 31 March vehicles

Subsidiary companies of EON:

EON properties Sdn. Bhd. 79.05 79.05 Investment and management of properties 31 March

Automotive Conversion Engineering Sdn. Bhd. 79.05 79.05 Conversion and modification of motor vehicles and 31 March distribution of car accessories

Euromobil Sdn. Bhd. 79.05 79.05 Sale of motor vehicles and related spare parts and 31 March servicing of vehicles

EON Auto Mart Sdn. Bhd. 79.05 79.05 Sale of motor vehicles and related spare parts and 31 March servicing of vehicles

EONMobil Sdn. Bhd. 79.05 79.05 Dormant 31 March


159



2010 2009 % %


Subsidiary companies of EON: (Continued)

EON Trading Sdn. Bhd. 79.05 79.05 Dormant 31 March

EON Resorts Sdn. Bhd. 79.05 79.05 Dormant 31 March

EON Technologies Sdn. Bhd. 79.05 79.05 Dormant 31 March

Corporate Galaxy Sdn. Bhd. 79.05 79.05 Dormant 31 March

liku Nostalgia Sdn. Bhd. 79.05 79.05 Dormant 31 March

Subsidiary company of EON Trading Sdn. Bhd.:

EON Inovasi Sdn. Bhd. 79.05 79.05 Dormant 31 March

Subsidiary company of EON Technologies Sdn. Bhd.:

EON Network Systems Sdn. Bhd. 79.05 79.05 Dormant 31 March

Subsidiary companies of Scott & English (Malaysia) Sdn. Bhd.:

* HICOM united leasing Sdn. Bhd. 70.00 70.00 Sales, servicing and rental of machinery and equipment 31 March

* Scott & English Trading (Sarawak) Sdn. Bhd. 35.70 35.70 Trading of heavy machinery and equipment, 31 March spare parts and electrical appliances

^* Myanmar Scott & English Company limited 70.00 70.00 Dormant 31 March

+* Scott & English (Cambodia) limited 70.00 70.00 Dormant 31 March (under voluntary liquidation)


160


2010 2009 % %


Subsidiary companies of Oriental Summit Industries Sdn. Bhd.:

Automotive Components Engineering Centre Sdn. Bhd. 70.00 70.00 Contract design and manufacturing of dies and jigs 31 March for automobile industry. Ceased operations during the financial year

$* OSI Manufacturing Sdn. Bhd. — 70.00 Dormant 31 March

Subsidiary companies of Comtrac Sdn. Bhd.:

Comtrac Trading Sdn. Bhd. 70.00 70.00 Trading of construction materials 31 March

Isti-Emas Sdn. Bhd. 70.00 70.00 Dormant 31 March

Comtrac premises Sdn. Bhd. 70.00 70.00 Dormant 31 March

$ Stagwell Sdn. Bhd. 70.00 100.00 Dormant 31 March

Comtrac Development Sdn. Bhd. 70.00 42.00 Dormant 31 March

Comtrac Builders Sdn. Bhd. 67.90 67.90 Supply, installation and construction of precast building 31 March works, manufacturing, supply and installation of precast component and provision of upgrading and renovation works

Comtrac-Sabkar Development Sdn. Bhd. 35.70 35.70 Construction works and property development 31 March

Comtrac Glenview Sdn. Bhd. 35.70 35.70 Investment holding and property development 31 March

Subsidiary company of Comtrac Glenview Sdn. Bhd.:

Glenview Management Corporation Sdn. Bhd. 35.70 35.70 property management 31 March


161



2010 2009 % %


Subsidiary companies of Glenmarie Properties Sdn. Bhd.:

* HICOM Indungan Sdn. Bhd. 100.00 100.00 property development 31 March

* Kenyir splendour Berhad 100.00 100.00 Resort management 31 March

HICOM facility Management Berhad 100.00 100.00 provision of facility management services 31 March

* Jubli Premis sdn. Bhd. 100.00 100.00 Dormant 31 March

$* Benua Kurnia sdn. Bhd. 100.00 — Dormant 31 March

$* Neraca prisma Sdn. Bhd. 100.00 — Dormant 31 March

* puncak permai Sdn. Bhd. 58.00 58.00 Investment holding 31 March

Subsidiary company of HICOM Megah Sdn. Bhd.:

#* Corwin Holding pte. ltd. 83.21 83.21 Owner and operator of a shopping mall 31 March

Subsidiary companies of HICOM Indungan Sdn. Bhd.:

* Rebak Island Marina Berhad 60.00 60.00 Operation of a marina resort and property holding 31 March

* HICOM Tan & Tan Sdn. Bhd. 50.00 50.00 Dormant 31 March

Subsidiary company of Puncak Permai Sdn. Bhd.:

* Horsedale Development Berhad 70.60 70.60 property development, management of hotel and 31 March golf resort

Subsidiary company of Horsedale Development Berhad:

* Kesturi Hektar sdn. Bhd. 70.60 70.60 Dormant 31 March


162


2010 2009 % %


Subsidiary companies of HICOM Technical and Engineering Services Sdn. Bhd.:

HICOM Ventures Sdn. Bhd. 100.00 100.00 Dormant 31 March

HICOM Environmental Sdn. Bhd. 51.00 51.00 Dormant 31 March (under voluntary liquidation)

Subsidiary companies of Intrakota Komposit Sdn. Bhd.:

s.J. Kenderaan sdn. Bhd. 70.00 70.00 Dormant 31 March

mega Komposit Auto sdn. Bhd. 70.00 70.00 Dormant 31 March

Gemilang Komposit Auto sdn. Bhd. 70.00 70.00 Dormant 31 March

Syarikat pengangkutan Malaysia Sendirian Berhad 69.99 69.99 Dormant 31 March

Intrakota Consolidated Berhad 47.34 47.34 Dormant 31 March

s.J. Binateknik sdn. Bhd. 42.00 42.00 Dormant 31 March

Toong fong Omnibus Company Sendirian Berhad 39.06 39.06 Dormant 31 March

JOINTLY CONTROLLED ENTITIES

Jointly controlled entity of DRB-HICOM Berhad:

* Isuzu Malaysia Sdn. Bhd. 49.00 49.00 Importation, assembly and distribution of motor vehicles, 31 December components and parts


163



2010 2009 % %

JOINTLY CONTROLLED ENTITIES (Continued)

Jointly controlled entities of HICOM Holdings Berhad:

* HICOM-HONDA Manufacturing Malaysia Sdn. Bhd. 48.00 48.00 Manufacture and assembly of motorcycle engines and 31 March components

V* MBM Alam flora w.l.l. 48.00 48.00 provision of waste management clearing services 31 December

* HICOM-yAMAHA Manufacturing Malaysia Sdn. Bhd. 45.00 45.00 Manufacture and assembly of motorcycle engines and 31 March parts

Jointly controlled entities of EON:

* Mitsubishi Motors Malaysia Sdn. Bhd. 37.94 37.94 Distribution of motor vehicles, vehicle components, 31 March spare parts and accessories

proton parts Centre Sdn. Bhd. 36.62 36.62 warehousing and distribution of motor vehicles, 31 March spare parts and accessories

Jointly controlled entity of Horsedale Development Berhad:

* HICOM-Gamuda Development Sdn. Bhd. 35.30 35.30 Housing and property development and rental of 31 March properties

Jointly controlled entities of Comtrac Sdn. Bhd.:

$* Comtrac Businessworld Sdn. Bhd. — 35.00 Dormant 31 March

$* Comtrac-Concrete Constructions Sdn. Bhd. — 34.30 Dormant 31 March


164


2010 2009 % %

ASSOCIATED COMPANIES

Associated companies of DRB-HICOM Berhad:

* HICOM-Chevrolet Sdn. Bhd. 49.00 49.00 Distributor for motor vehicles. Ceased operations during 31 December the financial year

Suzuki Malaysia Automobile Sdn. Bhd. 40.00 40.00 Assembly and sale of motor vehicles, accessories and 31 March components

Honda Malaysia Sdn. Bhd. 34.00 34.00 Assembly, manufacture and sale of motor vehicles, 31 March accessories and components

* Marak unggul Sdn. Bhd. 29.99 29.99 Dormant 31 December

Associated companies of HICOM Holdings Berhad:

* ISuZu HICOM Malaysia Sdn. Bhd. 49.00 49.00 Manufacturing, assembly and sale of commercial 31 March vehicles

$* Continental Automotive Instruments Malaysia Sdn. Bhd. — 33.33 Manufacture and sale of instrument panels/clusters, 31 December speedometers, sensors, transducers and senders for the transportation industry

* Zf Steerings (Malaysia) Sdn. Bhd. 30.00 30.00 Manufacture and assembly of mechanical and 31 December power rack and pinion steering systems

* Suzuki Motorcycle Malaysia Sdn. Bhd. 29.00 29.00 Investment holding and manufacture, assembly and 31 December distribution of motorcycles and parts

$* Niro Ceramic (M) Sdn. Bhd. 22.25 23.17 Manufacturing and trading of ceramic tiles 31 December

* TRw Steering & Suspension (Malaysia) Sdn. Bhd. 20.00 20.00 Manufacturing and sale of automobile tierods, tierod 31 December ends and suspension ball joints, stabiliser links, steering linkages and power steering gear

* Midea Scott & English Electronics Sdn. Bhd. 40.00 40.00 Trading in consumer electrical and electronics 31 December household products


165



2010 2009 % %

ASSOCIATED COMPANIES (Continued)

Associated companies of EON:

* SRT-EON Security Services Sdn. Bhd. 31.62 31.62 Provision of security services 30 June

Johnson controls Automotive Holding (m) sdn. Bhd. 23.72 23.72 Manufacturing of car seats, seat paddings, steering 30 September wheels, and other car interior parts, investment holding and property letting

$ The changes in the effective equity interest in these companies in the Group are as disclosed in Notes 48, 49 and 55.

* These companies in the Group are audited by other firms of auditors other than pricewaterhouseCoopers, Malaysia and its member firms of pricewaterhouseCoopers International limited.

# The country of incorporation is Singapore.

+ The country of incorporation is Cambodia.

^ The country of incorporation is Myanmar.

@ The country of incorporation is Thailand.

V The country of incorporation is Bahrain.

All the other companies are incorporated in Malaysia.


166

4 REVENUE Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Sale of goods 3,622,887 3,991,310 — — Rendering of services 1,485,230 1,225,573 — — Insurance business 386,181 399,447 — — Banking 766,479 318,836 — — Construction contracts 19,779 16,457 — — Sale of land and development properties 33,578 149,804 — — Dividends (gross) — — 279,053 183,538 Rental income — — 12,292 12,001 Interest income from subsidiary/associated companies — — 31,878 35,936

6,314,134 6,101,427 323,223 231,475

5 PROFIT BEFORE TAXATION(a) Cost of sales Group

2010 2009 RM’000 RM’000

Cost of inventories 3,292,223 3,646,395 Cost of services rendered 1,044,020 962,272 Cost of insurance business 411,932 361,379 Cost of banking 302,711 131,625 Cost of contract and property development 48,719 99,649

5,099,605 5,201,320


167


5 PROFIT BEFORE TAXATION (CONTINUED)(b) profit before taxation is arrived at after charging/(crediting) the following:

Group Company

2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

Allowance for/(write back of) marketable securities and financing of customers (net) 96,235 47,927 (9,907) 27,081 Amortisation of – biological assets 15 — 80 — — – intangible assets 21 20,623 8,934 — — – prepaid lease properties 13 1,411 1,512 — — Auditors’ remuneration – current year 2,015 1,782 140 140 – prior year 26 10 — — Contribution for Albukhary International university 50,000 — 5,000 — Depreciation of property, plant and equipment 12 134,930 135,776 459 446 Directors’ emoluments 6 6,313 7,539 846 896 Doubtful debts (net of write backs) 14,693 31,351 2,879 4,980 Impairment losses of – investment in an associated company — — — 5,198 – land held for property development 16(b) — 21,103 — — – non-current assets held for sale — 5,795 — — – property, plant and equipment 12 71,336 14,678 — — Inventories written off/down (net of write backs) 10,255 36,557 — — loss/(gain) on disposal of investment properties 9 (55) — — loss/(gain) on disposal of shares in – subsidiary companies — (470) — — – associated companies 201 (567,481) — — Marked to market loss/(gain) on derivatives (net) 4,371 — — — prepaid lease properties written off 13 — 1,011 — — project expenditure written off — 1,377 — 1,377 property, plant and equipment written off 12 1,682 3,173 — — provision for/(write back of) liabilities and charges (net) 36 2,802 5,460 — — Rental of plant and machinery and equipment 15,802 13,083 — — Rental of premises 34,361 26,293 — — Replanting expenditure for biological assets 973 930 — — Staff costs 7 696,175 579,417 — — Dividend income (gross) – quoted (1,544) (2,990) — — – unquoted (1,627) (1,331) (279,053) (183,538) Excess of fair value of net assets acquired over purchase consideration (137) (28,007) — — Gain arising from accretion of interest in a subsidiary company — (1,965) — —


168

5 PROFIT BEFORE TAXATION (CONTINUED)(b) profit before taxation is arrived at after charging/(crediting) the following: (Continued)

Group Company

2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

(Gain)/loss on fair value adjustment of investment properties 14 (5,755) 38,200 7,522 7,588 (Gain)/loss on disposal of investments (19,544) 9,949 — — Gain on disposal of – estates (211,433) — — — – property, plant and equipment (5,264) (956) (16) (16) Gain on waiver of payables/borrowings (20,135) (4,142) (20,135) (4,021) Interest income on – short term deposits (31,750) (53,961) (1,980) (1,812) – subsidiary companies — — (31,878) (34,989) – associated company — — — (947) Net foreign exchange differences (14,283) 8,859 — — Rental income of premises (27,717) (20,842) (12,292) (12,001) Rental income of plant and machinery and equipment (474) (830) — — (Reversal of)/allowance for impairment loss of investments (13,237) 2,139 — —

6 DIRECTORS’ EMOLUMENTS Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Non-executive Directors: – fees 896 985 708 746 – allowances and other benefits 1,288 1,466 138 150 Executive Directors: – salaries, bonuses, allowances and other benefits 3,697 4,576 — — – defined contribution plan 432 512 — —

6,313 7,539 846 896


169


7 STAFF COSTS Group

2010 2009 RM’000 RM’000

Salaries, wages, bonuses, allowances and other benefits 619,641 524,079 Defined contribution plan 70,534 53,900 Termination benefits 6,000 1,438

696,175 579,417

8 FINANCE COSTS Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Interest expense on borrowings 65,687 93,125 28,765 43,327 Hire purchase and finance lease charges 2,879 2,530 — —

68,566 95,655 28,765 43,327

9 TAXATION Group Company

2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

Arising in Malaysia: Current taxation 111,257 51,439 61,286 36,638 Deferred taxation 22 9,888 8,261 (708) 1,668 Outside Malaysia: Current taxation 31 30 — —

121,176 59,730 60,578 38,306

Arising in Malaysia: Over provision of current taxation in respect of prior financial years (6,547) (10,168) (55) (895)

Total taxation charge 114,629 49,562 60,523 37,411


170

9 TAXATION (CONTINUED) Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

The explanation of the relationship between taxation charge and profit before taxation is as follows:

Numerical reconciliation of effective taxation charge profit before taxation 657,894 774,943 268,004 123,217

Tax calculated at the Malaysian tax rate of 25% (2009: 25%) 164,474 193,736 67,001 30,804

Tax effects of: – share of results of jointly controlled entities (19,990) (19,417) — — – share of results of associated companies (24,727) (24,038) — — – expenses not deductible for tax purposes 73,963 63,805 1,181 12,106 – income not subject to tax (68,771) (160,416) (7,604) (4,604) – tax losses/temporary differences not recognised 7,159 2,997 — — – different tax rates (734) 4,580 — — – utilisation of previously unrecognised tax losses (10,198) (1,517) — — Over provision of current taxation in respect of prior financial years (6,547) (10,168) (55) (895)

Taxation charge 114,629 49,562 60,523 37,411

unabsorbed tax losses, unutilised capital allowances, unutilised investment tax allowances and unutilised reinvestment allowances of the Group which are available for set-off against future chargeable income for which the tax effects have not been recognised in the financial statements are shown below:

Group

2010 2009 RM’000 RM’000

unabsorbed tax losses 1,066,001 1,088,774 unutilised capital allowances 252,159 241,543 unutilised investment tax allowances 42,287 42,287 unutilised reinvestment allowances 126,737 126,737


171


10 DIVIDENDS Dividends paid, declared and proposed are as follows:

Group and Company

2010 2009 RM’000 RM’000

Dividend paid In respect of the financial year ended 31 March 2009: final gross dividend of 2.5 sen (2008: final gross dividend of 3.5 sen) per share, less taxation of 25% (2008: 25%) 36,248 26,450

In respect of the financial year ended 31 March 2010: Interim gross dividend of 1.5 sen (2009: Interim (special) gross dividend of 13.333 sen) per share, less taxation of 25% (2009: 25%) 21,749 100,761

At the forthcoming Annual General Meeting of the Company, a final gross dividend in respect of the financial year ended 31 March 2010 of 2.5 sen (2009: 2.5 sen) per share less taxation of 25% (2009: 25%), amounting to RM36,248,195 (2009: RM36,248,195) will be proposed for shareholders’ approval. These financial statements do not reflect this final dividend which will be paid in the financial year ending 31 March 2011 when approved by shareholders.

11 EARNINGS PER SHARE The basic earnings per share is calculated by dividing the Group’s net profit attributable to equity holders of the Company by the weighted average number of shares

in issue during the financial year.

Group

2010 2009

Net profit attributable to equity holders of the Company (RM’000) 472,298 660,507

weighted average number of ordinary shares in issue (‘000) 1,933,237 1,393,286

Basic earnings per share (sen) 24.43 47.41


172

12 PROPERTY, PLANT AND EQUIPMENT Buildings, golf course Freehold and Plant and Motor Office Furniture Capital work- land improvements machinery vehicles equipment and fittings in-progress Total GROUP Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Net book value at 1 April 2008 310,024 939,670 296,810 23,074 87,555 27,139 29,681 1,713,953 Acquisition of subsidiary 48(iii) companies (d)&(e) 30,000 68,043 — 462 12,499 16,026 — 127,030 Additions 4,788 15,896 41,404 4,103 20,663 5,668 90,338 182,860 Disposals — (4) (645) (2,429) (102) (194) — (3,374) written off 5 — (677) (278) (108) (153) (79) (1,878) (3,173) Depreciation charge 5 — (29,070) (63,452) (5,422) (27,821) (10,011) — (135,776) Impairment losses 5 — (13,512) (1,142) — (13) (11) — (14,678) Currency translation differences (203) (538) (1,107) — (21) (1) — (1,870) Reclassification (840) (31,179) 80,353 (2) 2,512 743 (51,587) — Reclassification from intangible assets 21 — — — — 146 — — 146 Reclassification of non-current assets held for sale 25 (45,897) (510) (135) (194) (30) (22) — (46,788) Transfers from investment properties 14 — 11,733 — — — — — 11,733 Transfers from property development activities 16(a) — 5,998 — — — — — 5,998

Net book value at 31 March 2009 297,872 965,850 351,808 19,484 95,235 39,258 66,554 1,836,061


173


12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Buildings, golf course Freehold and Plant and Motor Office Furniture Capital work- land improvements machinery vehicles equipment and fittings in-progress Total GROUP Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Additions — 9,450 37,160 4,319 27,885 7,332 52,481 138,627 Disposals (593) (555) (3,234) (1,307) (728) (9) (366) (6,792) written off 5 — (567) (538) (26) (519) (25) (7) (1,682) Depreciation charge 5 — (19,187) (66,382) (4,718) (31,956) (12,687) — (134,930) Impairment losses 5 (1,541) (34,301) (27,815) (1) (386) (288) (7,004) (71,336) Currency translation differences 191 489 809 — 9 1 — 1,499 Reclassification 713 381 41,691 (1) 9,327 — (52,111) — Transfers from/(to) investment properties 14 15,000 (333) — — — — — 14,667

Net book value at 31 March 2010 311,642 921,227 333,499 17,750 98,867 33,582 59,547 1,776,114

NET BOOK VALUE AT 31 MARCH 2010 Cost 328,183 1,556,094 1,385,157 47,341 464,971 206,590 66,551 4,054,887 Accumulated depreciation — (453,812) (1,012,729) (29,590) (364,116) (172,716) — (2,032,963) Accumulated impairment losses (16,541) (181,055) (38,929) (1) (1,988) (292) (7,004) (245,810)

Net book value 311,642 921,227 333,499 17,750 98,867 33,582 59,547 1,776,114

NET BOOK VALUE AT 31 MARCH 2009 Cost 312,872 1,554,312 1,321,521 49,550 442,194 199,848 66,554 3,946,851 Accumulated depreciation — (441,710) (958,528) (30,066) (345,357) (160,586) — (1,936,247) Accumulated impairment losses (15,000) (146,752) (11,185) — (1,602) (4) — (174,543)

Net book value 297,872 965,850 351,808 19,484 95,235 39,258 66,554 1,836,061


174

12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Freehold Plant and Motor Office Furniture Capital work- land machinery vehicles equipment and fittings in-progress Total COMPANY Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Net book value at 1 April 2008 — 1,800 392 177 240 221 2,830 Additions — — — 1 1 335 337 Disposals — — (20) — — — (20) Transfers to a subsidiary company — — — (38) — (556) (594) Depreciation charge 5 — (200) (95) (75) (76) — (446)

Net book value at 31 March 2009 — 1,600 277 65 165 — 2,107 Additions — — 500 325 — — 825 Transfer from a subsidiary company 3,000 — — — — — 3,000 Disposals — — (189) — — — (189) Depreciation charge 5 — (200) (162) (32) (65) — (459)

Net book value at 31 March 2010 3,000 1,400 426 358 100 — 5,284

NET BOOK VALUE AT 31 MARCH 2010 Cost 3,000 12,154 525 1,214 749 — 17,642 Accumulated depreciation — (10,754) (99) (856) (649) — (12,358)

Net book value 3,000 1,400 426 358 100 — 5,284

NET BOOK VALUE AT 31 MARCH 2009 Cost — 12,154 618 889 749 — 14,410 Accumulated depreciation — (10,554) (341) (824) (584) — (12,303)

Net book value — 1,600 277 65 165 — 2,107

(a) Certain property, plant and equipment of the Group with a net book value of RM345,665,000 (2009: RM356,131,000) have been charged as security for bank borrowings (Notes 35 and 40).


175


12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)(b) The details of motor vehicles, plant and machinery, and office equipment acquired under hire purchase and finance lease agreements of the Group are as

follows: Hire purchase and finance lease

2010 2009 RM’000 RM’000

Additions during the financial year: – plant and machinery 1,797 19,074 – Capital work-in-progress — 3,025

1,797 22,099

Net book value at financial year end: – Motor vehicles 1,360 1,772 – plant and machinery 36,651 45,248 – Office equipment 233 738 – Capital work-in-progress — 3,025

38,244 50,783

(c) The title deeds to the freehold land of certain subsidiary companies amounting to RM12,824,000 (2009: RM15,355,000) are in the process of being registered in the names of the subsidiary companies.

13 PREPAID LEASE PROPERTIES Short term Long term leasehold land leasehold land Total Note RM’000 RM’000 RM’000

Group Net book value At 1 April 2008 9,536 67,489 77,025 Acquisition of a subsidiary company 48(iii)(e) — 265 265 Amortisation charge 5 (313) (1,199) (1,512) written off 5 — (1,011) (1,011) Transfers from investment properties 14 181 177 358 Transfers to non-current assets held for sale 25 (17) (597) (614)

At 31 March 2009 9,387 65,124 74,511 Amortisation charge 5 (322) (1,089) (1,411) Transfers to investment properties 14 — (117) (117)

At 31 March 2010 9,065 63,918 72,983


176

13 PREPAID LEASE PROPERTIES (CONTINUED) Short term Long term leasehold land leasehold land Total RM’000 RM’000 RM’000

Group Net book value at 31 March 2010 Cost 11,237 74,262 85,499 Accumulated amortisation (2,172) (10,344) (12,516)

Net book value 9,065 63,918 72,983

Net book value at 31 March 2009 Cost 11,237 74,406 85,643 Accumulated amortisation (1,850) (9,282) (11,132)

Net book value 9,387 65,124 74,511

(a) Certain prepaid lease properties of the Group with net book value of RM26,082,000 (2009: RM22,985,000) have been charged as security for bank borrowings (Notes 35 and 40).

(b) The title deeds to the leasehold land of certain subsidiary companies amounting to RM13,741,000 (2009: RM13,982,000) are in the process of being registered in the names of the subsidiary companies.

14 INVESTMENT PROPERTIES Group Company

2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

At 1 April 585,515 609,286 155,164 162,752 Additions 6,176 18,193 — — Disposals (1,035) (380) — — Currency translation differences (4,294) 8,324 — — Transfers to property, plant and equipment 12 (14,667) (11,733) — — Transfers from/(to) prepaid lease properties 13 117 (358) — — Transfers to land held for property development 16(b) (40,000) — — — Transfers from inventories 5,004 — — — Transfers from non-current assets held for sale — 383 — — Changes in fair value during the financial year 5 5,755 (38,200) (7,522) (7,588)

At 31 March 542,571 585,515 147,642 155,164


177


14 INVESTMENT PROPERTIES (CONTINUED) Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

The disclosure on income and expenses of investment properties are as below: Rental income 22,933 22,107 12,292 12,001

Direct operating expenses from investment properties that generated rental income during the financial year 10,189 10,688 256 424

Direct operating expenses from investment properties that did not generate rental income during the financial year 344 1,441 — —

(a) The fair value of the investment properties of the Group and the Company were based on valuations by independent professional qualified valuers. Valuations for the investment properties were based on current prices in an active market.

(b) The titles to certain properties included in investment properties with a carrying value of RM39,422,000 (2009: RM33,880,000) are in the process of being transferred to an insurance subsidiary company.

(c) Certain investment properties of the Group with carrying value of RM443,393,000 (2009: RM443,971,000) have been charged as security for bank borrowings (Notes 35 and 40).

15 BIOLOGICAL ASSETS Group

2010 2009 Note RM’000 RM’000

Net book value At 1 April — 19,743 Amortisation charge 5 — (80) Transfers to non-current assets held for sale 25 — (19,663)

At 31 March — —


178

16 PROPERTY DEVELOPMENT ACTIVITIES(a) Property development costs Group

2010 2009 Note RM’000 RM’000

At cost At 1 April land 125,861 136,112 Development costs 628,190 659,176 Accumulated costs charged to income statement (573,866) (594,849)

180,185 200,439 less: Completed developments in previous years – land (10,765) (9,898) – Development costs (171,660) (63,481) – Accumulated costs charged to income statement 182,425 73,379

— — Add: Costs incurred during the financial year – land — 263 – Development costs 21,031 35,295

21,031 35,558 Transfers from land held for property development 16(b) 86,329 2,442 less: Costs recognised as an expense in income statement during the financial year (23,663) (31,926) Transfers to inventories (3,258) (20,330) Transfers to property, plant and equipment 12 — (5,998)

At 31 March 260,624 180,185

At end of the financial year land 140,709 125,861 Development costs 535,019 628,190 Accumulated costs charged to income statement (415,104) (573,866)

260,624 180,185


179


16 PROPERTY DEVELOPMENT ACTIVITIES (CONTINUED)(b) Land held for property development Group

2010 2009 Note RM’000 RM’000

At cost At 1 April land 132,409 196,221 Development costs 138,112 133,083 Accumulated impairment losses (21,103) —

249,418 329,304 Acquisition of a subsidiary company 48(i)(b) 727,900 — Add: Costs incurred during the financial year – Development costs 211 6,978

977,529 336,282 Transfers from investment properties 14 40,000 — Transfers to property development costs 16(a) (86,329) (2,442) Transfers to non-current assets held for sale 25 — (63,319) Impairment losses 5 — (21,103)

At 31 March 931,200 249,418

At end of the financial year land 874,157 132,409 Development costs 78,146 138,112 Accumulated impairment losses (21,103) (21,103)

931,200 249,418

Included in property development costs and land held for property development is interest on borrowings capitalised for the financial year amounting to RM3,778,000 (2009: RM5,342,000).

land amounting to RM1,046,258,000 (2009: RM319,283,000) belonging to subsidiary companies, included in property development costs and land held for property development, have been charged as security for bank borrowings (Notes 35 and 40) and bank guarantee.


180

17 SUBSIDIARY COMPANIES Company

2010 2009 RM’000 RM’000

unquoted shares, at cost 4,211,563 4,204,563 less: Accumulated impairment losses (48,677) (48,677)

4,162,886 4,155,886

Amounts due from subsidiary companies (non-trade) 1,244,922 1,172,251 less: Allowance for doubtful debts (228,752) (225,968)

1,016,170 946,283

The details of the subsidiary companies are listed in Note 3 to the financial statements.

The amounts due from subsidiary companies are unsecured and have no fixed terms of repayment. Interest is charged at 4.00% to 6.40% (2009: 4.00% to 6.40%) per annum on RM792,860,000 (2009: RM731,160,000) of the outstanding amounts.

The fair value of the amounts due from subsidiary companies is RM989,620,000 (2009: RM929,118,000).

18 JOINTLY CONTROLLED ENTITIES Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Share of net assets 331,925 334,083 — —

unquoted shares, at cost — — 9,800 9,800

The details of the jointly controlled entities, all of which are unquoted, are listed in Note 3 to the financial statements.


181


18 JOINTLY CONTROLLED ENTITIES (CONTINUED) The Group’s share of the assets, liabilities, revenue and expenses of the jointly controlled entities is as follows:

Group

2010 2009 RM’000 RM’000

Non-current assets 103,353 106,135 Current assets 421,080 363,501 Non-current liabilities (34,874) (33,745) Current liabilities (157,634) (101,808)

Share of net assets 331,925 334,083

Revenue 992,074 808,528 Expenses (915,834) (725,865)

profit before taxation 76,240 82,663 Taxation (19,990) (19,417)

Net profit 56,250 63,246

(a) Capital commitments for property, plant and equipment – contracted 3,724 337 – not contracted 8,079 6,215

11,803 6,552

(b) There are no contingencies relating to jointly controlled entities.


182

19 ASSOCIATED COMPANIES Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Share of net assets 409,691 417,321 — —

unquoted shares, at cost — — 71,803 71,803

The details of the associated companies are listed in Note 3 to the financial statements.

The Group’s share of the assets, liabilities, revenue and expenses of the associated companies is as follows:

Group

2010 2009 RM’000 RM’000

Non-current assets 188,412 209,065 Current assets 536,724 502,821 Non-current liabilities (11,793) (26,421) Current liabilities (303,652) (268,144)

Share of net assets 409,691 417,321

Revenue 1,541,698 1,675,337 Expenses (1,444,399) (1,580,770)

profit before taxation 97,299 94,567 Taxation (24,727) (24,038)

Net profit 72,572 70,529

(a) Capital commitments for property, plant and equipment – contracted 403 1,271 – not contracted 12,244 16,079

12,647 17,350

(b) There are no contingencies relating to associated companies.

(c) The accumulated share of losses that have not been recognised by the Group amounted to RM11,859,000 (2009: RM11,859,000).


183


20 OTHER INVESTMENTS Group

2010 2009 RM’000 RM’000

(i) Held by a banking subsidiary company(a) Investments: Held-to-maturity At amortised cost Corporate bonds, at cost 30,285 32,952 Accumulated impairment loss (2,061) (2,061)

Total held-to-maturity investments 28,224 30,891

Non-current 28,224 28,346 Current — 2,545

28,224 30,891

(b) Investments: Available-for-sale At fair value Quoted securities: Malaysian government investment certificates 1,181,505 857,450 Cagamas bonds 115,647 100,507 Khazanah bonds — 182,813 Islamic private debt securities 2,596,505 1,977,744 Sukuk 115,043 172,870 Negotiable instrument of deposit certificates — 5,964

4,008,700 3,297,348 unquoted securities: Shares 4,105 4,105

Total available-for-sale investments 4,012,805 3,301,453

Non-current 3,292,058 2,638,068 Current 720,747 663,385

4,012,805 3,301,453

(c) Investments: Held-for-trading At fair value Malaysian government investment certificates — 10,228


184

20 OTHER INVESTMENTS (CONTINUED) Group

2010 2009 RM’000 RM’000

(ii) Held by insurance subsidiary companies(a) Quoted securities: Malaysian Government Securities, at cost 120,786 125,126 Amortisation of premiums (104) (517)

120,682 124,609

(b) unquoted securities: Corporate debt securities, at cost 1,030,292 704,107 Accretion of discounts net of amortisation of premiums 450 9,137 less: Allowance for diminution in value (4,670) (4,765)

1,026,072 708,479

(c) unquoted shares, at cost 2,374 2,374 less: Allowance for diminution in value (178) (176)

2,196 2,198

Sub-total 1,148,950 835,286

(iii) Held by other Group companies(a) Quoted securities: Quoted shares in malaysia, at cost 1,688 1,688 less: Allowance for diminution in value — (985)

1,688 703

(b) Subordinated bonds 6,000 6,000 less: Allowance for diminution in value (6,000) (6,000)

— —

(c) unquoted securities: unquoted shares, at cost 47,686 48,239 less: Allowance for diminution in value (6,363) (4,974)

41,323 43,265

Sub-total 43,011 43,968

Total (excluding other investments held by a banking subsidiary company) 1,191,961 879,254


185


20 OTHER INVESTMENTS (CONTINUED)(a) The carrying amounts of other investments at balance sheet date approximated their fair values except for the following:

2010 2009

Carrying Carrying amount Fair value amount Fair value RM’000 RM’000 RM’000 RM’000

Group Malaysian Government Securities 120,682 120,682 124,609 126,612 Corporate debt securities, unquoted 1,026,072 1,035,780 708,479 711,571 Quoted shares 1,688 1,802 703 703

1,148,442 1,158,264 833,791 838,886

(b) The carrying amounts of unquoted shares at balance sheet date approximated their fair values.

21 INTANGIBLE ASSETS Licences/ Operation and Product maintenance Computer development Goodwill concession Core deposits software expenditure Total Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group 2010 At 1 April 2009 49,423 161,931 56,300 1,217 803 269,674 Adjustment to provisional goodwill 48(iii)(e) (18,060) — — — — (18,060)

As restated 31,363 161,931 56,300 1,217 803 251,614 Additions — — — 2,224 535 2,759 Amortisation charge 5 — (7,202) (12,300) (414) (707) (20,623)

At 31 March 2010 31,363 154,729 44,000 3,027 631 233,750

2010 Cost 31,363 164,932 61,400 3,678 3,803 265,176 Accumulated amortisation — (10,203) (17,400) (651) (3,172) (31,426)

Carrying amount 31,363 154,729 44,000 3,027 631 233,750


186

21 INTANGIBLE ASSETS (CONTINUED) Licences/ Operation and Product maintenance Computer development Goodwill concession Core deposits software expenditure Total Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group 2009 At 1 April 2008 21,313 — — 361 1,362 23,036 Acquisition of subsidiary companies 48(iii)(d)&(e) 10,050 164,932 61,400 — — 236,382 Additions — — — 1,095 181 1,276 Amortisation charge 5 — (3,001) (5,100) (93) (740) (8,934) Reclassification to property, plant and equipment 12 — — — (146) — (146)

At 31 March 2009 31,363 161,931 56,300 1,217 803 251,614

2009 Cost 31,363 164,932 61,400 1,454 3,268 262,417 Accumulated amortisation — (3,001) (5,100) (237) (2,465) (10,803)

Carrying amount 31,363 161,931 56,300 1,217 803 251,614

The carrying amount of goodwill was allocated to three of the Group’s cash generating units (CGus), namely defence services (RM4,665,000), airport ground handling services (RM16,648,000) and banking (RM10,050,000). The recoverable amounts of the three CGus were determined based on value-in-use calculations. These calculations used pre-tax cash flow projections based on approved financial budgets. Cash flows beyond the budgeted period were extrapolated using estimated terminal growth rates. Based on these, the recoverable amount of goodwill exceeded its carrying value.


187


22 DEFERRED TAXATION Group Company


At 1 April 73,212 37,644 (2,370) (702) Adjustment to provisional goodwill 48(iii)(e) 30,600 — — —

As restated 103,812 37,644 (2,370) (702) Acquisition of subsidiary companies 48 — 81,504 — — Movement in life assurance fund (7,112) (7,075) — — Movement in the equity (2,534) — — — (Charged)/credited into income statement 9 – Investments (14,637) 2,572 — — – property, plant and equipment (5,250) (13,816) 708 (1,668) – property development expenditure — 7,735 — — – provisions 12,383 1,204 — — – Receivables (22,629) 3,035 — — – Tax losses 20,272 (9,031) — — – unearned premium reserve (27) 40 — —

(9,888) (8,261) 708 (1,668)

At 31 March 84,278 103,812 (1,662) (2,370)

Subject to income tax Deferred tax assets (before offsetting) property, plant and equipment 59,708 60,190 3,593 3,136 Investments 7,635 20,509 — — provisions 22,880 12,208 — — Receivables 63,244 90,161 — — unearned premium reserve 8 35 — — Tax losses 36,585 16,313 — —

190,060 199,416 3,593 3,136 Offsetting (59,425) (59,951) (3,593) (3,136)

Deferred tax assets (after offsetting) 130,635 139,465 — —


188

22 DEFERRED TAXATION (CONTINUED) Group Company

2010 2009 2010 2009 Restated RM’000 RM’000 RM’000 RM’000

Subject to income tax Deferred tax liabilities (before offsetting) property, plant and equipment (101,872) (92,972) (5,255) (5,506) Investments (3,908) (918) — — provisions — (1,711) — — Receivables (2) (3) — —

(105,782) (95,604) (5,255) (5,506) Offsetting 59,425 59,951 3,593 3,136

Deferred tax liabilities (after offsetting) (46,357) (35,653) (1,662) (2,370)

presented after appropriate offsetting as follows: Deferred tax assets 130,635 139,465 — — Deferred tax liabilities (46,357) (35,653) (1,662) (2,370)

84,278 103,812 (1,662) (2,370)

23 FINANCING OF CUSTOMERS Group

2010 2009 Restated RM’000 RM’000

Cash line 428,225 448,309 Term financing – Home financing 4,076,724 4,000,029 – Syndicated financing 164,712 209,671 – Hire purchase receivables 1,557,575 1,472,203 – leasing receivables 205,120 140,035 – Other term financing 3,425,429 2,374,811 Trust receipts 140,769 154,593 Claims on customers under acceptance credits 730,361 742,273 Staff financing 89,202 97,413 Revolving credits 498,891 609,742

11,317,008 10,249,079 less: unearned income (3,909,046) (3,487,551)

7,407,962 6,761,528


189


23 FINANCING OF CUSTOMERS (CONTINUED) Group

2010 2009 Restated RM’000 RM’000

less: financing sold to Cagamas (380,846) (397,626)

7,027,116 6,363,902 less: Allowance for bad and doubtful financing: – General (207,014) (215,079) – Specific (334,904) (365,170)

Total net financing, advances and other financing 6,485,198 5,783,653

Non-current 5,166,102 4,672,622 Current 1,319,096 1,111,031

6,485,198 5,783,653

fair values 7,660,251 6,983,135

The fair values of financing of customers are estimated based on expected future cash flows of contractual instalments payments, discounted at applicable and prevailing rates at balance sheet date offered for similar facilities to new borrowers with similar credit profiles. In respect of non-performing financing, the fair values are deemed to approximate the carrying values, which are net of specific allowance for bad and doubtful financing.

24 STATUTORY DEPOSITS WITH BANK NEGARA MALAYSIA(a) The statutory deposits are maintained with Bank Negara Malaysia in compliance with Section 37(1)(c) of the Central Bank of Malaysia Act, 1958 (revised 1994),

the amounts of which are determined at set percentages of total eligible liabilities.

(b) The carrying amounts as at balance sheet date approximated their fair values.


190

25 NON-CURRENT ASSETS HELD FOR SALE Group

2010 2009 Note RM’000 RM’000

property, plant and equipment 12 — 46,788 prepaid lease properties 13 — 614 Biological assets 15 — 19,663 land held for property development 16(b) — 63,319 Associated company — 10,290

— 140,674

26 INVENTORIES Group

2010 2009 RM’000 RM’000

Raw materials 54,568 49,621 work-in-progress 131,209 68,640 finished goods 409,434 499,777 Consumables 33,603 28,882 Completed units of unsold properties 28,251 34,887

657,065 681,807

Certain inventories of subsidiary companies amounting to RM14,448,000 (2009: RM10,439,000) have been pledged as security for bank borrowings (Notes 35 and 40).


191


27 TRADE AND OTHER RECEIVABLES Group Company

2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

Trade receivables 811,182 823,990 11,868 62,418 less: Allowance for doubtful debts (91,170) (103,212) (9,198) (9,198)

720,012 720,778 2,670 53,220

Other receivables 308,731 285,772 2,201 2,055 less: Allowance for doubtful debts (35,169) (31,005) (2,031) (1,936)

273,562 254,767 170 119

Amounts due from subsidiary companies — — 16,922 37,774 less: Allowance for doubtful debts — — (149) (149)

— — 16,773 37,625

Amounts due from jointly controlled entities 7,783 11,623 18 4 Amounts due from associated companies 17,980 60,407 637 900 Amounts due from related parties 111,002 81,800 — — Amounts due from customers on contracts 46 6,451 970 — — Accrued billings 402 402 — — Deposits 18,848 161,883 41 305 prepayments 11,129 11,403 171 141

173,595 328,488 867 1,350

1,167,169 1,304,033 20,480 92,314

The currency exposure profile of trade and other receivables is as follows: – Ringgit Malaysia 1,149,521 1,286,392 20,480 92,314 – uS Dollar 9,059 12,734 — — – Thai Baht 3,946 2,653 — — – Others 4,643 2,254 — —

1,167,169 1,304,033 20,480 92,314


192

27 TRADE AND OTHER RECEIVABLES (CONTINUED)(a) The Group’s and the Company’s normal trade credit terms range from 30 to 60 days (2009: 30 to 60 days). Other credit terms are assessed and approved

on a case by case basis.

(b) Included in trade receivables of the Group and the Company is an amount of RM2,670,000 (2009: RM53,220,000) owing by the Government in respect of Electrified Double Track project.

(c) Included in other receivables for the Group is an amount of RM28,070,000 (2009: RM29,835,000) in respect of reimbursement of certain operating expenditure of a subsidiary company due from the Ministry of finance.

(d) In previous financial year, included in deposits was an amount of RM141,771,000 relating to the deposit paid for the acquisitions as disclosed in Note 48 (i) (b).

(e) All other amounts due from subsidiary companies, jointly controlled entities and associated companies are non-interest bearing, unsecured and have no fixed terms of repayment.

28 MARKETABLE SECURITIES Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Lower of cost and market value Shares, warrants and other instruments quoted – in Malaysia 231,006 413,315 — — – outside Malaysia 156,162 49,549 21,607 11,700

387,168 462,864 21,607 11,700

29 SHORT TERM DEPOSITS(a) Short term deposits consist of deposits with licensed banks and are denominated in Ringgit Malaysia.

(b) Certain deposits with licensed banks of the Group amounting to RM36,646,000 (2009: RM10,078,000) have been pledged as security for banking facilities.

(c) Included in short term deposits is the maintenance reserve account of approximately RM36,948,000 (2009: RM30,886,000) maintained by a subsidiary company performing operations and maintenance services to a power plant, pursuant to the Operations and Maintenance Agreement.


193


29 SHORT TERM DEPOSITS (CONTINUED)(d) The weighted average effective annual interest rates of short term deposits at the end of the financial year are as follows:

Group Company

2010 2009 2010 2009 % % % %

Deposits with bank 2.34 2.36 2.20 1.82

(e) Deposits of the Group and Company have an average maturity period of 82 (2009: 132) and 22 (2009: 12) days respectively.

30 CASH AND BANK BALANCES(a) Bank balances are deposits held at call with banks and are non-interest bearing.

(b) Included in cash and bank balances of the Group are bank accounts maintained pursuant to the Housing Developers (Control & licensing) Act 1966, amounting to RM16,174,000 (2009: RM13,024,000).

(c) The currency exposure profile of cash and bank balances is as follows:

Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

– Ringgit Malaysia 175,027 158,584 4,032 4,016 – uS Dollar 4,053 11,953 — — – Singapore Dollar 3,959 1,923 — — – Others 1,743 1,132 — —

184,782 173,592 4,032 4,016

31 CASH AND SHORT-TERM FUNDS OF A BANKING SUBSIDIARY COMPANY Group

2010 2009 RM’000 RM’000

Cash and balances with banks and other financial institutions 152,804 128,869 Money at call and interbank placements with remaining maturities not exceeding one month 5,622,579 3,440,236

5,775,383 3,569,105


194

31 CASH AND SHORT-TERM FUNDS OF A BANKING SUBSIDIARY COMPANY (CONTINUED)(a) The currency exposure profile of the cash and short-term funds of a banking subsidiary company is as follows:

Group

2010 2009 RM’000 RM’000

– Ringgit Malaysia 5,615,516 3,374,787 – uS Dollar 140,196 115,969 – Japanese yen 12,401 — – Euro 7,148 73,871 – Others 122 4,478

5,775,383 3,569,105

(b) The weighted average effective annual interest rates of cash and short-term funds of a banking subsidiary at the end of the financial year are as follows and the average maturity period is not exceeding one month:

Group

2010 2009 % %

Cash and short-term funds 2.25 3.00

32 SHARE CAPITAL Group and Company

2010 2009

Number of Number of Shares Nominal Value Shares Nominal Value ’000 RM’000 ’000 RM’000

Authorised: Ordinary shares of RM1.00 each 2,000,000 2,000,000 2,000,000 2,000,000

Issued and fully paid: Ordinary shares: At 1 April 1,933,237 1,719,601 1,007,607 1,007,607 Issued (Note 48 (iii) (d) & (e)) — — 925,630 711,994

At 31 March 1,933,237 1,719,601 1,933,237 1,719,601


195


33 LIFE ASSURANCE FUND Based on the actuarial valuation of the life Assurance fund made up to 31 March 2010, the actuary was satisfied that the assets available in the life Assurance

fund are sufficient to meet its long term liabilities to policyholders.

Group

2010 2009 RM’000 RM’000

Actuarial liabilities At 1 April 1,202,643 1,171,774 Add: – Increase in policy reserves 216,476 11,016 – Bonus allocated to participating policyholders, including interim bonus from normal surplus — 20,444 less: Interim bonus — (591)

At 31 March 1,419,119 1,202,643

Unallocated surplus At 1 April 50,322 76,129 Add/(less): Surplus/(deficit) arising during the financial year 106,598 (2,363) less: – Bonus allocated to participating policyholders, including interim bonus from normal surplus (19,915) (20,444) – Transfer to income statement (28,000) (3,000)

At 31 March 109,005 50,322

life policyholders’ fund as at end of financial year: Actuarial liabilities 1,419,119 1,202,643 unallocated surplus 109,005 50,322

1,528,124 1,252,965

34 DEFERRED INCOME This represents club membership licence fees received in advance by a subsidiary company, net of amounts recognised as income in the financial statements.


196

35 LONG TERM BORROWINGS Group Company

2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

Secured• Hire purchase and finance lease liabilities 26,320 37,268 — —

– portion repayable within 12 months included under bank borrowings 40 (9,991) (13,915) — —

16,329 23,353 — —

• long term loans 382,793 452,215 — —– portion repayable within 12 months included under bank borrowings 40 (75,357) (63,144) — —

307,436 389,071 — —

• long term loans under islamic financing 370,221 263,843 236,000 96,000– portion repayable within 12 months included under bank borrowings 40 (79,977) (34,054) (45,000) —

290,244 229,789 191,000 96,000

Unsecured• long term loans under islamic financing 250,000 250,000 — —

• long term loans — 60,000 — —– portion repayable within 12 months included under bank borrowings 40 — (60,000) — —

— — — —

• Deferred liability 38,144 38,144 — —

902,153 930,357 191,000 96,000


197


35 LONG TERM BORROWINGS (CONTINUED)(a) The hire purchase and finance lease liabilities are secured against the respective assets acquired. The long term loans are secured against certain freehold and

leasehold lands under property, plant and equipment, prepaid lease properties, investment properties, property development costs and inventories (Notes 12, 13, 14, 16 and 26).

(b) The long term loans under Islamic financing relates to Subordinated Bonds under the Shariah principle of Bai’ Bithaman Ajil of a banking subsidiary company. The Bonds are under a 10 non-callable 5 basis feature, with a profit rate of 6.25% per annum payable semi-annually. under the 10 non-callable 5 basis feature, the banking subsidiary company has the option to redeem the Bonds on the fifth anniversary or any semi-annual date thereafter. Should the banking subsidiary company decide not to exercise its option to redeem the Bonds, the holders of the Bonds will be entitled to an annual incremental step-up profit rate from the beginning of the 6th year to the final maturity date.

(c) The weighted average effective annual interest rates at the end of the financial year are as follows:

Group Company

2010 2009 2010 2009 % % % %

Hire purchase and finance lease liabilities 2.69 3.78 — — long term loans (secured and unsecured) 3.04 4.13 — — long term loans under Islamic financing 5.65 6.32 4.66 6.15

(d) The currency exposure profile of the long term borrowings is as follows:

Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

– Ringgit Malaysia 690,208 710,785 191,000 96,000 – Singapore Dollar 211,945 219,572 — —

902,153 930,357 191,000 96,000


198

35 LONG TERM BORROWINGS (CONTINUED)(e) Hire purchase and finance lease liabilities

Group

2010 2009 RM’000 RM’000

Minimum hire purchase and finance lease payments: – not later than 1 year 11,782 16,616 – later than 1 year and not later than 2 years 11,552 11,910 – later than 2 years and not later than 3 years 3,314 8,196 – later than 3 years and not later than 4 years 2,875 5,979 – later than 4 years and not later than 5 years 79 456 – later than 5 years — 10

29,602 43,167 future finance charges on hire purchase and finance lease (3,282) (5,899)

present value of hire purchase and finance lease liabilities 26,320 37,268

Representing hire purchase and finance lease liabilities: – non-current 16,329 23,353 – current (included in Note 40) 9,991 13,915

26,320 37,268

(f) The deferred liability is in respect of amounts owing of RM38,144,000 (2009: RM38,144,000) by a solid waste subsidiary company to local municipalities in relation to the transfer of certain units of movables assets from these municipalities to the subsidiary company.


199


35 LONG TERM BORROWINGS (CONTINUED)(g) The exposure of long term borrowings, excluding deferred liability, to interest rate risk is as follows:

Maturity profile

Carrying amount 1 – 2 years 2 – 3 years 3 – 4 years 4 – 5 years > 5 years RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group 2010 Fixed rate (Fair value risk) Hire purchase and finance lease liabilities 16,329 8,015 5,601 2,629 84 — long term loans (secured and unsecured) 50,442 16,430 16,878 8,865 3,763 4,506 long term loans under Islamic financing 540,244 77,777 88,502 58,595 29,370 286,000

607,015 102,222 110,981 70,089 33,217 290,506

Floating rate (Cash flow risk) long term loans (secured and unsecured) 256,994 7,784 9,985 207,725 5,250 26,250

864,009 110,006 120,966 277,814 38,467 316,756

2009 Fixed rate (Fair value risk) Hire purchase and finance lease liabilities 23,353 9,690 7,670 5,594 394 5 long term loans (secured and unsecured) 50,382 33,275 2,526 3,240 3,240 8,101 long term loans under Islamic financing 479,789 46,612 48,158 52,858 25,119 307,042

553,524 89,577 58,354 61,692 28,753 315,148

Floating rate (Cash flow risk) long term loans (secured and unsecured) 338,689 59,584 42,273 15,687 208,245 12,900

892,213 149,161 100,627 77,379 236,998 328,048

Company 2010 Fixed rate (Fair value risk) long term loan under Islamic financing 84,000 12,000 12,000 12,000 12,000 36,000

Floating rate (Cash flow risk) long term loan under Islamic financing 107,000 33,000 33,000 33,000 8,000 —

191,000 45,000 45,000 45,000 20,000 36,000

2009 Fixed rate (Fair value risk) long term loan under Islamic financing 96,000 12,000 12,000 12,000 12,000 48,000


200

35 LONG TERM BORROWINGS (CONTINUED)(h) Fair value

• Fair values of fixed rate long term borrowings and deferred liability are as follows:

2010 2009

Carrying Carrying amount Fair value amount Fair value RM’000 RM’000 RM’000 RM’000

Group Deferred liability 38,144 36,053 38,144 36,139 Hire purchase and finance lease liabilities 16,329 15,456 23,353 31,826 long term loans (secured and unsecured) 50,442 48,086 50,382 51,211 long term loans under Islamic financing 540,244 530,547 479,789 464,586

645,159 630,142 591,668 583,762

• the fair values of loan term loans under islamic financing relates to subordinated Funds under the shariah principle of Bai’ Bithaman Ajil of a banking subsidiary company and are estimated by discounting the expected future cash flows using the applicable prevailing interest rates for borrowings with similar risks profiles.

36 PROVISION FOR LIABILITIES AND CHARGES Warranty Sales returns Total Note RM’000 RM’000 RM’000

Group 2010 At 1 April 10,217 618 10,835 Currency translation differences 20 — 20 Charge 5 3,811 870 4,681 utilised (8,254) (177) (8,431) unused amounts reversed 5 (903) (976) (1,879)

At 31 March 4,891 335 5,226

Non-current 690 — 690 Current 4,201 335 4,536

4,891 335 5,226


201


36 PROVISION FOR LIABILITIES AND CHARGES (CONTINUED) Warranty Sales returns Total Note RM’000 RM’000 RM’000

Group 2009 At 1 April 13,651 519 14,170 Currency translation differences (19) — (19) Charge 5 10,027 1,247 11,274 utilised (8,583) (193) (8,776) unused amounts reversed 5 (4,859) (955) (5,814)

At 31 March 10,217 618 10,835

Non-current 830 — 830 Current 9,387 618 10,005

10,217 618 10,835

37 DEPOSITS FROM CUSTOMERS OF A BANKING SUBSIDIARY COMPANY Group

2010 2009 RM’000 RM’000

Non-Mudharabah Fund Demand deposits 2,674,435 2,742,645 Saving deposits 626,145 577,937 Negotiable Islamic debts certificates 1,299,566 1,154,933 Others 18,776 21,665

4,618,922 4,497,180

Mudharabah Fund General investment deposits 8,385,149 5,116,846 Special general investment deposits 1,444,163 1,004,676

9,829,312 6,121,522

14,448,234 10,618,702

Non-current 2,398,293 2,323,244 Current 12,049,941 8,295,458

14,448,234 10,618,702


202

37 DEPOSITS FROM CUSTOMERS OF A BANKING SUBSIDIARY COMPANY (CONTINUED)(a) The fair value of deposits from customers are estimated to approximate their carrying amounts as the profit rates are determined at the end of their holding

periods based on the actual profits generated from the assets invested.

(b) The currency exposure profile of the deposits from customers of a banking subsidiary company is as follows:

Group

2010 2009 RM’000 RM’000

– Ringgit Malaysia 14,448,234 10,122,418 – uS Dollar — 496,284

14,448,234 10,618,702

(c) The maturity period of the deposits from customers of a banking subsidiary company is as follows:

Group

2010 2009 RM’000 RM’000

– not later than 6 months 11,682,889 7,791,999 – later than 6 months and not later than 1 year 367,052 503,459 – later than 1 year and not later than 5 years 2,398,293 2,323,244

14,448,234 10,618,702

38 GENERAL AND LIFE INSURANCE FUNDS Group

2010 2009 RM’000 RM’000

Outstanding claims: provision for outstanding claims 441,516 350,308 Recoverable from reinsurers (76,214) (74,284)

Net outstanding claims 365,302 276,024 unearned premium reserves 154,536 157,043

519,838 433,067


203


39 TRADE AND OTHER PAYABLES Group Company

2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

Trade payables 590,201 630,345 4,731 73,747 Other payables and accruals 1,164,644 700,686 17,613 5,963 progress billings 4,643 19,008 — — Amounts due to subsidiary companies — — 378,754 509,825 Amounts due to jointly controlled entities 11,004 24,275 — — Amounts due to associated companies 35,439 68,037 — — Amounts due to related parties 74,283 82,739 — — Amounts due to customers on contracts 46 747 2,262 — —

1,880,961 1,527,352 401,098 589,535

(a) The currency exposure profile of trade and other payables is as follows: – Ringgit Malaysia 1,785,829 1,445,918 401,098 589,535 – Singapore Dollar 40,513 39,187 — — – Japanese yen 6,660 19,077 — — – Thai Baht 10,729 6,221 — — – uS Dollar 35,633 9,250 — — – Others 1,597 7,699 — —

1,880,961 1,527,352 401,098 589,535

(b) The Group’s and the Company’s normal trade payables terms range from 30 to 90 days (2009: 30 to 90 days).

(c) Included in amounts due to subsidiary companies are interest bearing loans amounting to RM372,068,000 (2009: RM503,210,000). Interest is charged at 2.25% (2009: 4.00%) per annum on the interest bearing loans. The loans are unsecured and have no fixed terms of repayment.

(d) All other amounts due to subsidiary companies, jointly controlled entities and associated companies are non-interest bearing, unsecured and have no fixed terms of repayment.

(e) Included in other payables and accruals is balance purchase price to Danaharta Hartanah Sdn. Bhd. (“Danaharta”) for the land held for property development of the newly acquired subsidiary companies as disclosed in note 48 (i) (b). the amount is payable within 36 months from 30 June 2008 and is secured by a bank guarantee given to Danaharta of RM238,950,000.


204

40 BANK BORROWINGS Group Company

2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

(i) Bank overdrafts – secured 20,897 16,102 — — – unsecured 8,649 9,423 — —

29,546 25,525 — —

(ii) Other bank borrowings Secured Bankers acceptances 72,980 34,165 — — Revolving credits 24,100 3,000 — — Hire purchase and finance lease liabilities – portion repayable within 12 months 35 9,991 13,915 — — long term loans – portion repayable within 12 months 35 75,357 63,144 — — long term loans under Islamic financing – portion repayable within 12 months 35 79,977 34,054 45,000 —

Unsecured Bankers acceptances 158,051 179,561 — — Revolving credits 171,134 196,400 146,000 155,000 Short term loans 4,490 4,017 — — long term loans – portion repayable within 12 months 35 — 60,000 — —

596,080 588,256 191,000 155,000

625,626 613,781 191,000 155,000

(a) The currency exposure profile of bank overdrafts and other bank borrowings is as follows:

Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

– Ringgit Malaysia 611,666 604,966 191,000 155,000 – Thai Baht 4,490 4,017 — — – Singapore Dollar 9,470 4,798 — —

625,626 613,781 191,000 155,000


205


40 BANK BORROWINGS (CONTINUED)(b) The secured bank overdrafts, bankers acceptances, letters of credit, revolving credits, and short term loans are secured by way of fixed and floating charges

over certain property, plant and equipment, prepaid lease properties, investment properties, property development costs and inventories (Notes 12, 13, 14, 16 and 26).

(c) The weighted average effective annual interest rates of the bank overdrafts and other bank borrowings at the end of the financial year are as follows:

Group Company

2010 2009 2010 2009 % % % %

Bank overdrafts 7.25 6.63 — — Bankers acceptances 3.36 3.07 — — Revolving credits 4.87 5.55 4.87 5.17 Short term loans 2.30 3.15 — —

41 DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS Group

2010 2009 RM’000 RM’000

Non-Mudharabah Bank Negara Malaysia 16,361 16,362 licensed banks — 36,503 licensed Islamic banks — 72,950

16,361 125,815

The above are denominated in Ringgit Malaysia and the average maturity period is not exceeding six months (2009: six months).

42 BILLS AND ACCEPTANCES PAYABLES(a) Bills and acceptance payables are denominated in Ringgit Malaysia and the average maturity period is not exceeding six months (2009: six months).

(b) The weighted average effective annual interest rate of bills and acceptances payables at the end of the financial year is as follows:

Group

2010 2009 % %

Bills and acceptances payables 2.93 2.34


206

43 SHARE PREMIUM Group and Company

2010 2009 RM’000 RM’000

At 1 April/31 March 20,701 20,701

44 MERGER RESERVE Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

At 1 April/31 March 911,016 911,016 2,318,321 2,318,321

pursuant to Section 60(4)(a) of the Companies Act, 1965, the premiums on the shares issued by the Company as consideration for the acquisitions of certain subsidiary companies in the financial year ended 31 March 2001 are not recorded as share premium. The difference between the issue price and the nominal value of shares issued is classified as merger reserve.

45 CURRENCY TRANSLATION DIFFERENCES AND OTHER RESERVES Group

2010 2009 RM’000 RM’000

Non-distributable Capital redemption reserve arising from redemption of preference shares 2,156 2,156 Share of associated companies’ statutory reserve 4,599 4,415 Share of subsidiary companies’ statutory reserve 38,140 1,538 Asset revaluation reserve on step up acquisition of subsidiary companies 21,101 21,101 Currency translation differences 6,550 6,305

72,546 35,515

At 1 April 35,515 158,492 Share of subsidiary company’s statutory reserve 36,602 1,538 Currency translation differences of subsidiary companies 245 1,155 Share of an associated company’s reserve 184 (475) Transfer of associated companies’ statutory reserve — (4,560) Release of statutory reserves on disposal of an associated company — (113,635) Disposal of a subsidiary company — (7,000)

At 31 March 72,546 35,515


207


46 CONSTRUCTION CONTRACTS Group

2010 2009 Note RM’000 RM’000

Aggregate contract costs incurred 83,435 131,304 Recognised profits less losses 12,642 19,829

96,077 151,133 less: progress billings (90,373) (152,425)

5,704 (1,292)

Analysed as follows: Amounts due from customers on contracts 27 6,451 970 Amounts due to customers on contracts 39 (747) (2,262)

5,704 (1,292)

47 RETAINED EARNINGS under the single-tier tax system which came into effect from the year of assessment 2008, companies are not required to have tax credits under Section 108 of the

Income Tax Act, 1967 for dividend payment purposes. Dividends paid under this system are tax exempt in the hands of shareholders.

Companies with Section 108 credits as at 31 December 2007 may continue to pay franked dividends until the Section 108 credits are exhausted or 31 December 2013 whichever is earlier unless they opt to disregard the Section 108 credits to pay single-tier dividends under the special transitional provisions of the finance Act 2007.

As at 31 March 2010, the Company has sufficient Section 108 tax credits (which expires on 31 December 2013) to pay RM240,182,000 (2009: RM298,179,000) of the retained earnings of the Company as franked dividends. In addition, the Company has tax exempt income of RM159,842,000 (2009: RM153,742,000) as at 31 March 2010, available to frank as tax exempt dividends.


208

48 SUMMARY OF EFFECTS OF ACQUISITION OF COMPANIES 2010

(i) Subsidiary companies(a) On 10 April 2009, Comtrac Sdn. Bhd., effectively a 70% indirect subsidiary company of the Group, acquired the remaining 40% equity stake in HICOM-

TNB properties Sdn. Bhd. (“HICOM-TNB”) for a cash consideration of RM1.00. As a result, HICOM-TNB became a 70% indirect subsidiary company of the Group. On 30 April 2009, HICOM-TNB has changed its name to Comtrac Development Sdn. Bhd.

The acquisition of the remaining equity ownership in HICOM-TNB is regarded as a transaction with the minority interest and an excess of fair value of net assets acquired over purchase consideration of RM137,000 which has been recognised in the income statement.

(b) On 24 December 2009, Glenmarie properties Sdn. Bhd. (formerly known as HICOM properties Sdn. Bhd.), a wholly-owned subsidiary company of the Group, completed the acquisitions of the entire equity interests in Benua Kurnia sdn. Bhd. (“BKsB”) and neraca Prisma sdn. Bhd. (“nPsB”). As a result, BKsB and nPsB became wholly-owned subsidiary companies of the Group.

The purchase consideration of the above acquisitions amounting to RM483,513,000 (excluded the replacement of existing bank guarantee in favour of Danaharta amounted to RM238,950,000) were satisfied in the following manner:

(i) the disposal of five (5) DrB-Hicom Group’s plantation lands comprising connemara, serendah, Bukit Kledek, Gadek and Kupang estates at RM341,742,000; and

(ii) the balance of RM141,771,000 was satisfied by cash.

As part purchase consideration for the acquisitions of BKsB and nPsB, the Group had completed the disposals of connemara, serendah, Bukit Kledek, Gadek and Kupang estates for total sale consideration of rm341,742,000 as at 31 march 2010.

the acquisitions of BKsB and nPsB have been accounted for as purchases of assets and the excess of purchase cost over the carrying value of net assets acquired have been recognised as part of land held for property development acquired in the consolidated balance sheet.

Details of the increase in value of the land held for property development recognised from the acquisitions are as follows:

RM’000

purchase consideration 483,513 Add: Expenses directly attributable to the acquisition, paid in cash 2,346

Total purchase consideration 485,859 less: Carrying value of net assets acquired (35,840)

Increase value in land held for property development recognised 450,019


209


48 SUMMARY OF EFFECTS OF ACQUISITION OF COMPANIES (CONTINUED) 2010 (Continued)

(i) Subsidiary companies (Continued)(b) (Continued) Details of the net assets acquired are as follows:

Carrying value Fair value RM’000 RM’000

land held for property development 277,881 727,900 Trade and other receivables 456 456 Cash and bank balances 47 47 Trade and other payables (242,544) (242,544)

Net assets acquired 35,840 485,859

Details of cash flow arising from the acquisitions are as follows:

RM’000

Total purchase consideration 485,859 less: proceeds on disposal of estates (341,742)

purchase consideration, settled in cash 144,117 Cash and cash equivalents arising from subsidiary companies acquired (47)

Cash outflow on acquisitions of subsidiary companies 144,070


(ii) Associated company On 31 December 2009, HICOM Holdings Berhad (“HHB”) converted its Convertible Redeemable loan Stock of RM163,374 into 100,848 new ordinary shares

of RM1.00 each at the conversion price of RM1.28 in Niro Ceramic (M) Sdn. Bhd. (“Niro Ceramic”). As a result, HHB’s shareholding in Niro Ceramic reduced from 23.17% to 22.25%.


210

48 SUMMARY OF EFFECTS OF ACQUISITION OF COMPANIES (CONTINUED) 2009

(iii) Subsidiary companies(a) pursuant to the Rights Issue undertaken by Alam flora Sdn. Bhd. (“AfSB”), the Group subscribed for a total of 24 million new ordinary shares of RM1.00

each in AFsB. As a result, the Group’s shareholding in AFsB increased from 55% to 60.53% in July 2008.

(b) On 8 September 2008, the Company completed the acquisition of an additional 15% equity interest in Motosikal Dan Enjin Nasional Sdn. Bhd. (“moDenAs”) from Khazanah nasional Berhad for a cash consideration of rm24 million. As a result, the Group’s shareholding in moDenAs increased from 55% to 70%.

(c) On 18 September 2008, HICOM Holdings Berhad acquired an additional 9.03% equity interest in pHN Industry Sdn. Bhd. (“pHN”) from Nagoya Oak Industries Co. ltd. for a cash consideration of RM8.13 million. As a result, the Group’s equity interest in pHN increased from 53.47% to 62.5%.

(d) On 23 September 2008, the shareholders of the Company approved the proposed acquisition of 100% equity interest in Rangkai positif Sdn. Bhd. (“Rp”) for a purchase consideration of RM720,000,000 to be satisfied entirely by the issuance of 376,963,350 new ordinary shares of RM1.00 each in DRB-HICOM at an implied value of RM1.91 per share.

On 22 October 2008, the Company completed the acquisition of the entire equity interest in Rp for RM292,146,596 via the issuance of 376,963,350 new ordinary shares of RM1.00 each at a fair value of RM0.775 per share. As a result, Rp became a wholly-owned subsidiary company of the Group.

The acquisition of Rp has been accounted for as a purchase of asset and the excess of fair value of purchase cost over the estimated net assets acquired have been classified as a concession asset within intangible assets in the consolidated balance sheet.

Details of the operation and maintenance concession arising from the acquisition are as follows:

RM’000

Issue of ordinary shares at fair value (net of issuance cost of RM2,159,000) 289,988 Add: Expenses directly attributable to the acquisition, paid in cash 4,616

purchase consideration 294,604 fair value of net assets acquired (129,672)

Intangible assets – operation and maintenance concession recognised 164,932


211



(iii) Subsidiary companies (Continued)(d) (Continued) Details of the net assets acquired are as follows:

Carrying value Fair value RM’000 RM’000

property, plant and equipment 64 64 Other investments 29 29 Trade and other receivables 34,770 34,770 Tax recoverable 83,988 83,988 Cash and bank balances 43,944 43,944 Trade and other payables (33,110) (33,110) Deferred tax liabilities (13) (13)

Net assets acquired 129,672 129,672

Details of cash flow arising from the acquisition are as follows:

RM’000

purchase consideration, settled in cash 4,616 Cash and cash equivalents arising from subsidiary company acquired (43,944)

Cash inflow on acquisition of subsidiary company (39,328)

(e) On 23 September 2008, the shareholders of the Company approved the proposed acquisition of 70% equity interest in Bank Muamalat Malaysia Berhad (“BMMB”) for a purchase consideration of RM1,069,900,000 to be satisfied entirely by the issuance of 548,666,666 new ordinary shares of RM1.00 each in DRB-HICOM at an implied value of RM1.95 per share.

On 22 October 2008, the Company completed the acquisition of 70% equity interest in BMMB for RM425,216,666 via the issuance of 548,666,666 new ordinary shares of RM1.00 each at a fair value of RM0.775 per share. As a result, BMMB became a 70% subsidiary company of the Group.

As part of the conditions precedent to the completion of the acquisition of BMMB, Bank Negara Malaysia (“BNM”) requires the Company to divest a 30% equity interest in its investment in BMMB within a period to be agreed with BNM.


212


(iii) Subsidiary companies (Continued)(e) (Continued) upon completion of the acquisition of BMMB, the Group carried out the purchase price Allocation exercise which involves identifying and determining the

fair value to be assigned to the identifiable asset, liabilities and contingent liabilities of the acquired entity. The initial accounting resulted in goodwill on consolidation amounting to RM28,110,000 recognised in the previous financial year.

Subsequently, the Group completed its purchase price Allocation exercise within the stipulated time period resulting in an adjustment to the provisional goodwill previously recognised amounting to RM18,060,000 in the financial statements of the Group.

The following balances were restated in accordance with fRS 3 Business Combinations:

As previously stated Adjustments As restated RM’000 RM’000 RM’000

Consolidated balance sheet As at 31 March 2009 Intangible assets – Goodwill 49,423 (18,060) 31,363 – Other intangible assets 220,251 — 220,251 Deferred tax assets 108,865 30,600 139,465 Banking related assets – financing of customers 4,677,422 (4,800) 4,672,622 Minority interest 1,192,016 7,740 1,199,756

Details of the goodwill arising from the acquisition are as follows:

As previously stated As restated RM’000 RM’000

Issue of ordinary shares at fair value (net of issuance cost of RM3,211,000) 422,006 422,006 Add: Expenses directly attributable to the acquisition, paid in cash 5,284 5,284

purchase consideration 427,290 427,290 fair value of net assets acquired (399,180) (417,240)

Goodwill on consolidation 28,110 10,050


213



(iii) Subsidiary companies (Continued)(e) (Continued) Details of net assets acquired are as follows:

As previously Carrying stated – As restated – value Fair value Fair value RM’000 RM’000 RM’000

property, plant and equipment 43,966 126,966 126,966 prepaid lease properties 265 265 265 Intangible assets 1,219 61,400 61,400 Deferred tax assets 46,917 50,917 81,517 Trade and other receivables 104,275 104,275 104,275 Banking related assets – Investments: Held-to-maturity 30,891 30,891 30,891 – Investments: Available-for-sale 2,891,066 2,828,466 2,828,466 – Investments: Held-for-trading 5,062 5,062 5,062 – financing of customers 6,148,110 5,932,710 5,927,910 – Statutory deposits with Bank Negara Malaysia 307,171 307,171 307,171 – Cash and short-term funds 4,233,669 4,233,669 4,233,669 Trade and other payables (120,316) (120,316) (120,316) Banking related liabilities – Deposits from customers (11,858,629) (11,858,629) (11,858,629) – Deposits and placements of banks and other financial institutions (251,911) (251,911) (251,911) – Bills and acceptances payables (630,679) (630,679) (630,679) Bank borrowings (250,000) (250,000) (250,000) Minority interest (210,323) (171,077) (178,817)

Net assets acquired 490,753 399,180 417,240

Details of cash flow arising from the acquisition are as follows:

RM’000

purchase consideration, settled in cash 5,284 Cash and cash equivalents arising from subsidiary company acquired (4,233,669)

Cash inflow on acquisition of subsidiary company (4,228,385)


214


(iii) Subsidiary companies (Continued)(e) (Continued) BMMB contributed revenue of RM318,836,000 and profit after taxation of RM47,840,000 to the Group for the period from the date of acquisition to 31

March 2009. Had the acquisition taken effect at the beginning of the financial year, the revenue and profit after taxation contributed to the Group would have been RM779,206,000 and RM55,888,000 respectively. These amounts have been calculated using the Group’s accounting policies and by adjusting the results of the subsidiary company to reflect the additional depreciation/amortisation that would have been charged assuming the fair value adjustments had applied from 1 April 2008, together with the consequential tax effects.

The total net cash inflow on acquisitions of subsidiary companies as above (items (d) and (e)) are RM4,267,713,000.

(iv) Associated company On 31 December 2008, HICOM Holdings Berhad (“HHB”) converted its Convertible Redeemable loan Stock of RM163,374 into 127,635 new ordinary shares

of RM1.00 each at the conversion price of RM1.28 in Niro Ceramic (M) Sdn. Bhd. (“Niro Ceramic”). As a result, HHB’s shareholding in Niro Ceramic reduced from 24.50% to 23.17%.

49 SUMMARY OF EFFECTS OF DISPOSAL OF COMPANIES 2010

(i) Subsidiary companies(a) on 5 June 2009, comtrac sdn. Bhd. acquired the entire 100% equity stake in stagwell sdn. Bhd. (“stagwell”) from a wholly-owned subsidiary company

of the Group, Automotive Corporation (Malaysia) Sdn. Bhd. via an internal reorganisation for a cash consideration of RM1,500. As a result, the Group’s shareholding in Stagwell diluted from 100% to 70%.

The changes in shareholdings in Stagwell did not have a material impact to the Group.

(b) On 20 february 2010, OSI Manufacturing Sdn. Bhd. (“OSIM”), an indirect 70% owned subsidiary company of the Group, was stricken off under Section 308 of the Companies Act, 1965. As a result, OSIM was ceased to be a subsidiary company of the Group.

(ii) Jointly controlled entities(a) On 7 November 2009, Comtrac Businessworld Sdn. Bhd. (“Comtrac Businessworld”) (under members’ voluntary winding up), effectively a 35% indirect

dormant jointly controlled entity of DRB-HICOM Berhad was dissolved. As a result, Comtrac Businessworld ceased to be a jointly controlled entity of the Group.

(b) On 6 february 2010, Comtrac-Concrete Constructions Sdn. Bhd. (“Comtrac-Concrete Constructions”) (under members’ voluntary winding up), effectively a 35% indirect dormant jointly controlled entity of DRB-HICOM Berhad was dissolved. As a result, Comtrac-Concrete Constructions ceased to be a jointly controlled entity of the Group.

(iii) Associated company On 20 April 2009, HICOM Holdings Berhad, effectively a 100% owned subsidiary company of the Group, completed the disposal of its entire 33.33% equity

interest in Continental Automotive Instruments Malaysia Sdn. Bhd. (“Continental”) to Continental Automotive GmbH for a total cash consideration of RM10,290,000. As a result, Continental ceased to be an associated company of the Group. There was no gain or loss arising from the disposal to the Group.


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49 SUMMARY OF EFFECTS OF DISPOSAL OF COMPANIES (CONTINUED) 2009

(iv) Subsidiary company On 7 August 2008, Scott & English Electronics Holdings Sdn. Bhd. (“SEEH”), effectively a 70% indirect subsidiary company of the Group, completed the disposal

of its entire 100% equity interest in Scott & English Electronics Sdn. Bhd. (“SEE”) for a total cash consideration of RM6.58 million to the following parties:

– midea refrigeration (Hong Kong) ltd. – 51%;– HICOM Holdings Berhad – 40%; and– Eastern Trinity Sdn. Bhd. – 9%.

As a result, SEE ceased to be a 70% indirect subsidiary company of the Group and became a 40% indirect associated company of the Group. On 17 October 2008, SEE changed its name to Midea Scott & English Electronics Sdn. Bhd.

The effect of the disposal of the subsidiary company as above, up to the date of disposal on the results of the Group is shown below:

RM’000

Revenue 10,815

profit after taxation (315)

The effect of the disposals of the subsidiary company on the financial position of the Group is shown below:

RM’000

property, plant and equipment 598 Inventories 10,399 Trade and other receivables 7,833 Cash and bank balances 667 Trade and other payables (973) provision for liabilities and charges (503) Bank overdrafts (515) Bank borrowings (11,396)

Net assets disposed 6,110 Gain on disposal 470

Total disposal proceeds 6,580 less: Reclassification of the subsidiary company as an associated company (2,646) less: Cash and bank balances of the subsidiary company disposed (667) Add: Bank overdraft of the subsidiary company disposed 515

Net cash inflow on disposal 3,782


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49 SUMMARY OF EFFECTS OF DISPOSAL OF COMPANIES (CONTINUED) 2009 (Continued)

(v) Associated companies(a) on 23 June 2008, Hicom Holdings Berhad, effectively a 100% owned subsidiary company of the Group, completed the disposal of its entire 20.2%

equity interest in EON Capital Berhad to primus pacific partners 1 l.p. for a cash consideration of approximately RM1.35 billion. As a result, EON Capital Berhad ceased to be an associated company of the Group. The gain arising from the disposal amounted to approximately RM567 million.

(b) On 22 December 2008, proton Cars (Europe) limited (“pCE”), a 44.4% associated company of Edaran Otomobil Nasional Berhad, was dissolved. As a result, pCE ceased to be an associated company of the Group.

50 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions which were

carried out on terms and conditions attainable in transactions with unrelated parties.

Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

(a) Sale of goods/services to: – Jointly controlled entities 35,756 33,058 — — – Associated companies 73,917 85,904 — — – Related parties 335,782 140,695 — —

(b) Purchase of goods/services from: – Jointly controlled entities 393,419 408,479 — — – Associated companies 245,473 340,612 — — – Related parties 248,098 142,124 — —

(c) Interest income: – Subsidiary companies — — 31,878 34,989

(d) Dividend income: – Subsidiary companies — — 173,608 144,008 – Associated companies — — 105,445 39,530


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50 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED) Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

(e) Inter-company loan to: – Subsidiary companies Disbursement — — 61,700 117,209 Repayment — — — 149,892 – Associated companies Repayment — 23,914 — 23,914

(f) Inter-company loan from: – Subsidiary companies proceeds — — — 1,109,807 Repayment — — 136,556 135,000 – Related parties proceeds — 19,600 — —

(g) Year end balances – banking – Related parties Revolving credits 106,816 125,361 — — Bank guarantee 125,805 125,000 — — Bonds purchased 229,608 229,608 — — Trade line 210,361 — — — Short term deposits 455,656 58,851 — — Term loan 58,575 — — — – Associated companies Trade line 17,530 — — — Short term deposits 39,778 — — —

(h) Key management compensation: – Salaries, bonuses, allowances and other benefits 6,917 6,353 — — – Defined contribution plan 862 749 — —

Apart from the above, the balances outstanding with related parties in respect of the above transactions are disclosed in Notes 17, 27 and 39 to the financial statements.


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51 CAPITAL AND OTHER COMMITMENTS(a) Non-banking Group

2010 2009 RM’000 RM’000

(i) Authorised capital expenditure not provided for in the financial statements – contracted for 36,561 72,516 – not contracted for 155,791 134,535

192,352 207,051

Analysed as follows: property, plant and equipment 192,352 207,051

(ii) lease commitments: Commitments under non-cancellable operating leases – repayable within 1 year 1,026 943 – repayable within 2 to 5 years 1,052 538

2,078 1,481

(iii) Commitments for forward foreign exchange contracts 187,289 75,203

The currency exposure profile and the expiry period for the forward foreign exchange contracts are as follows:

Equivalent Contractual amount in amounts Ringgit Malaysia Group (‘000) (‘000) Average contractual rate Expiry dates

2010 Japanese Yen 358,290 13,103 100 ¥ = RM3.657 1 April to 27 September 2010

Thai Baht 40,719 4,242 Baht 100 = RM10.417 5 April to 30 September 2010

US Dollar 46,803 163,108 USD1 = RM3.485 1 April 2010 to 31 March 2011

Euro Dollar 1,460 6,716 Euro 1 = RM4.600 1 April to 31 May 2010

Singapore Dollar 50 120 SGD 1 = RM2.400 15 April to 16 April 2010


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51 CAPITAL AND OTHER COMMITMENTS (CONTINUED)(a) Non-banking (Continued) Equivalent Contractual amount in amounts Ringgit Malaysia Group (‘000) (‘000) Average contractual rate Expiry dates

2009 Japanese yen 728,592 27,861 100 ¥ = rm3.824 1 April to 24 August 2009

thai Baht 5,718 609 Baht 100 = rm10.650 1 April to 25 may 2009

us Dollar 11,857 42,045 usD1 = rm3.546 1 April 2009 to 31 January 2010

euro Dollar 959 4,688 euro 1 = rm4.888 15 April to 15 July 2009

The net unrecognised loss/(gain) on open contracts which hedge anticipated future foreign currency transactions amounted to RM8,765,000 (2009: RM1,997,000). These are deferred until the related sales and purchases are transacted, at which time they are included in the measurement of such transactions.

(b) Banking(i) The value of contracts of financial instruments of a banking subsidiary company with off-balance sheet risk, traded in the ordinary course of business,

classified by remaining year to maturity or next repricing date (whichever is earlier), are as follows:

Principal >1 – 3 >3 – 6 >6 – 12 > 12 Items Amount < 1 month months months months months RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2010 foreign Exchange – forwards 290,089 4,507 107,423 81,482 96,677 — – Swaps 750,309 129,235 233,348 110,911 211,539 65,276

Total 1,040,398 133,742 340,771 192,393 308,216 65,276

2009 foreign Exchange – forwards 406,914 11,402 28,052 9,739 357,721 — – Swaps 688,961 280,191 246,585 — 162,185 —

Total 1,095,875 291,593 274,637 9,739 519,906 —

foreign exchange related contracts are subject to market risk and credit risk.


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51 CAPITAL AND OTHER COMMITMENTS (CONTINUED)(b) Banking (Continued)

(ii) Risk weighted exposures of a banking subsidiary company are as follows:

As at 31 March 2010

Credit Principal equivalent Risk weighted amount amount amount RM’000 RM’000 RM’000

Direct credit substitutes 609 609 612 Trade-related contingencies 80,091 16,018 13,996 Transaction related contingencies 1,993,954 996,977 490,906 Obligations under an on-going underwriting agreement 75,000 37,500 7,500 Housing financing sold directly and indirectly to Cagamas with recourse 380,846 380,846 194,646 Credit extension commitment – Maturity within one year 993,178 — — – Maturity exceeding one year 993,599 496,799 301,332 foreign exchange related contracts 1,214,752 29,820 15,362

5,732,029 1,958,569 1,024,354

As at 31 March 2009

Credit Principal equivalent Risk weighted amount amount amount RM’000 RM’000 RM’000

Direct credit substitutes 7,844 7,844 8,040 Trade-related contingencies 75,271 15,054 10,437 Transaction related contingencies 1,819,475 909,737 386,888 Obligations under an on-going underwriting agreement 77,000 38,500 7,700 Housing financing sold directly and indirectly to Cagamas with recourse 397,625 397,625 79,525 Credit extension commitment – Maturity exceeding one year 1,156,690 578,345 382,557 foreign exchange related contracts 1,904,461 28,364 24,302 profit related contracts 100,000 100 20 Other commitments 989,350 — —

6,527,716 1,975,569 899,469


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52 CONTINGENT LIABILITIES (UNSECURED) Except as disclosed below, there are no contingencies as at the balance sheet date.

Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

(a) Guarantees given to financial institutions in respect of facilities granted to subsidiary companies — — 112,498 163,867

(b) performance bonds and guarantees given to third parties 168,986 167,800 2,452 2,452

53 GROUP SEGMENT REPORTING The Group principally operates in Malaysia in the following main industry segments:

Industry segment Description

Automotive Manufacturing, assembly, pre-delivery inspection, distribution and sale of motor vehicles, motorcycles and special purpose vehicles including sale of related spares and services.

property and infrastructure property holding, development and construction works and facility management services.

Concession services Vehicle inspection, solid waste management, airport ground handling business and operations and maintenance services of a power plant.

Insurance services General and life insurance services.

Other services Trading in engineering products and higher education and vocational training institution.

Banking Islamic banking and related financial services.

(a) Primary reporting format – business segment Inter-segment revenue comprises revenue to other business segments carried out on an arm’s length basis.

Segment results represent segment revenue less segment expenses. unallocated expenses represent corporate operating and administrative expenses.

Segment assets consist primarily of property, plant and equipment, prepaid lease properties, biological assets, investment properties, inventories, receivables, property development costs, land held for property development, other investments, marketable securities, banking related assets, cash and bank balances and exclude interest bearing short term deposits, taxation assets and investments in jointly controlled entities and associated companies and non-current assets held for sale. Segment liabilities comprise mainly of payables, banking related liabilities and exclude items such as interest bearing borrowings, taxation liabilities and liabilities relating to non-current assets held for sale. unallocated liabilities consist of accruals on corporate operating and administrative expenses.

Capital expenditure comprises additions to property, plant and equipment, prepaid lease properties, investment properties, biological assets, intangible assets, land held for property developments and property development activities.


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53 GROUP SEGMENT REPORTING (CONTINUED)(b) Secondary reporting format – geographical segment The Group’s secondary format by geographical location, is not shown as the activities of the Group are predominantly in Malaysia and the overseas segment

does not contribute to more than 10% of the consolidated revenue and assets.

Primary reporting format – business segment

Property & Concession Insurance Other Investment Automotive Infrastructure Services Services Services Banking Holding Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Financial year ended 31 March 2010 Revenue Total revenue 3,663,053 188,997 1,108,434 397,100 305,403 767,318 26,602 6,456,907 Inter-segment revenue (61,227) (36,646) (4,598) (10,919) (1,942) (839) (26,602) (142,773)

External revenue 3,601,826 152,351 1,103,836 386,181 303,461 766,479 — 6,314,134

Segment results 703 171,500 166,860 (10,203) 24,877 205,734 61,537 621,008 unallocated expenses (55,120) Interest income 31,750 finance cost (68,566) Share of results of jointly controlled entities (net of tax) 41,969 14,281 — — — — — 56,250 Share of results of associated companies (net of tax) 68,934 5,093 — — (1,455) — — 72,572

profit before taxation 657,894 Taxation (114,629)

Net profit for the financial year 543,265


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53 GROUP SEGMENT REPORTING (CONTINUED) Primary reporting format – business segment (Continued)


Financial year ended 31 March 2010 Other information Segment assets 2,057,102 1,994,793 781,316 1,815,524 242,430 16,676,842 226,811 23,794,818 Interest bearing short term deposits 1,201,953 Taxation assets 256,192 Jointly controlled entities 198,102 133,823 — — — — — 331,925 Associated companies 377,664 31,958 — — 69 — — 409,691

Total assets 25,994,579

Segment liabilities 725,034 527,711 299,679 2,303,722 64,268 14,657,281 14,699 18,592,394 Interest bearing borrowings 1,489,635 Taxation liabilities 75,145 unallocated liabilities 14,895

Total liabilities 20,172,069

Capital expenditure 60,307 18,308 14,003 3,934 2,792 47,271 2,149 148,764

Depreciation and amortisation 71,505 10,045 33,595 7,446 7,168 24,517 2,689 156,965

Impairment loss 57,094 13,875 367 — — 17,009 — 88,345


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Financial year ended 31 March 2009 Revenue Total revenue 4,029,004 180,061 866,790 405,410 366,580 319,234 24,929 6,192,008 Inter-segment revenue (37,694) (13,800) (2,296) (5,963) (5,501) (398) (24,929) (90,581)

External revenue 3,991,310 166,261 864,494 399,447 361,079 318,836 — 6,101,427

Segment results (17,217) (160,671) 79,310 (27,886) 35,212 90,818 143,723 143,289 unallocated expenses (27,908) Interest income 53,961 Gain on disposal of investments in associated companies 567,481 finance cost (95,655) Share of results of jointly controlled entities (net of tax) 40,607 22,639 — — — — — 63,246 Share of results of associated companies (net of tax) 67,106 3,856 — — (433) — — 70,529

profit before taxation 774,943 Taxation (49,562)

Net profit for the financial year 725,381


225




Financial year ended 31 March 2009 Other information Segment assets 2,094,329 1,470,939 767,495 1,528,425 311,638 13,043,975 230,254 19,447,055 Interest bearing short term deposits 892,119 Taxation assets 291,616 Jointly controlled entities 185,891 148,192 — — — — — 334,083 Associated companies 382,243 27,354 — — 7,724 — — 417,321 Non-current assets held for sale 10,363 130,311 — — — — — 140,674

Total assets 21,522,868

Segment liabilities 707,685 359,821 286,783 1,798,173 81,556 11,367,287 12,665 14,613,970 Interest bearing borrowings 1,505,994 Taxation liabilities 35,551 unallocated liabilities 6,853

Total liabilities 16,162,368

Capital expenditure 105,541 36,245 38,731 3,782 4,366 9,640 1,139 199,444

Depreciation and amortisation 82,177 9,231 30,723 5,181 4,917 10,690 3,383 146,302

Impairment loss 19,832 60,631 98 — — 1,525 — 82,086


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54 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS Estimates and judgments are continually evaluated by the Directors and are based on historical experience and other factors, including expectations of future events

that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Group’s results and financial position are tested for sensitivity to changes in the underlying parameters. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.

(i) Deferred tax assets Deferred tax assets are recognised for all unabsorbed tax losses, unutilised capital allowances, unutilised investment tax allowances and unutilised reinvestment

allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised based on the likely timing and level of future taxable profits together with future tax planning strategies.

(ii) Estimate of fair value of investment properties The Group estimates the fair values of its investment properties using current prices in an active market. The principal assumptions underlying these valuations

are those relating to rentals, market yields, maintenance requirements and capitalisation rates and current prices of similar properties or property prices in less active markets adjusted accordingly.

Independent professional valuation is obtained as a basis for these estimates.

(iii) Provision for product warranties Certain subsidiary companies make provisions for product warranties based on an assessment of historical experience and industry average for defective

productions. The identification of defect liability requires the use of judgment and estimates. where the expectation is different from the original estimate, such difference will impact the carrying value of the provision for product warranties and will be charged to income statement as defective works and product warranty expenses in the period such an estimate has been changed.

The carrying amounts of provision for product warranties of defective works are disclosed in Note 36.

(iv) Construction contracts and property development activities The Group recognises revenue based on percentage of completion method. The stage of completion is measured by reference to the costs incurred to date to

the estimated total costs. Judgment is required in determining the stage of completion, the extent of the costs incurred, the estimated total revenue (other than fixed price contracts) and costs, as well as the recoverability of the receivables. In making the judgment, the Group relied on past experience and work of specialists.

(v) Impairment of property, plant and equipment The Group tests property, plant and equipment for impairment if there are any indicators of impairment. The recoverable amounts were determined based on

value in use or fair value less costs to sell, where appropriate. Based on these calculations, an impairment charge of RM71,336,000 (2009: RM14,678,000) was recognised during the financial year.


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54 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED)(vi) Deferred liability Deferred liability consists of amount due to municipalities from solid waste management business. The Group has disclosed the amounts due to municipalities

of RM38,144,000 (2009: RM38,144,000) as non-current liabilities in the financial statements. The Concession Agreement and the Supplemental Concession Takeover Agreement have yet to be finalised. The Concession Agreement is currently being reviewed whilst the Supplemental Concession Takeover Agreement is currently being drafted.

(vii) Fair value estimate of investments of a banking subsidiary company where the quoted and observable market prices of certain investments are not available, fair value is estimated using pricing models or discounted cash flow

techniques. The usage of these models and techniques require the banking subsidiary company of the Group to make certain estimates and assumptions, including but not limited to estimated future cash flows and discount rates.

(viii) Allowance for losses on advances and financing of a banking subsidiary company Specific allowances are made for doubtful debts which have been individually reviewed and specifically identified as substandard, bad or doubtful. The individual

assessment of financing may include making estimates and judgments about the counterparty’s financial position, fair value of the underlying collaterals and future recoverable cash flows in workout/restructuring arrangements.

55 SIGNIFICANT EVENTS(a) On 20 April 2009, HICOM Holdings Berhad, effectively a 100% owned subsidiary company of the Group, completed the disposal of its entire 33.33% equity

interest in Continental Automotive Instruments Malaysia Sdn. Bhd. (“Continental”) to Continental Automotive GmbH for a total cash consideration of RM10,290,000. As a result, Continental ceased to be an associated company of the Group.

(b) On 24 December 2009, Glenmarie properties Sdn. Bhd. (formerly known as HICOM properties Sdn. Bhd.), a wholly-owned subsidiary company of the Group, completed the acquisitions of the entire equity interests in Benua Kurnia sdn. Bhd. (“BKsB”) and neraca Prisma sdn. Bhd. (“nPsB”). As a result, BKsB and nPsB became wholly-owned subsidiary companies of the Group. As part purchase consideration for the acquisitions of BKsB and nPsB, the Group had completed the disposals of connemara, serendah, Bukit Kledek, Gadek and Kupang estates for total sale consideration of rm341,742,000. the gain arising from the disposal of estates to the Group amounted to approximately RM211 million.



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56 SUBSEQUENT EVENTS(a) On 29 March 2010, the non-interested shareholders of Edaran Otomobil Nasional Berhad (“EON”), a 79.05% owned subsidiary company of the Group, approved

the special resolution in relation to the proposed selective capital reduction and repayment exercise under Section 64 of the Companies Act, 1965 (“proposed SCR”) at the Extraordinary General Meeting. The proposed SCR will result in the reduction of EON’s issued and paid-up share capital from RM248,992,823 comprising 248,992,823 EON Shares to RM168,164,209 comprising 168,164,209 EON Shares by way of cancelling a total of 80,828,614 EON Shares, as follows:

(i) all the outstanding EON Shares held by non-interested shareholders involving 52,147,493 EON Shares; and

(ii) the balance of 28,681,121 EON Shares held by HICOM Holdings Berhad (“HICOM”), effectively a 100% owned subsidiary company of the Group.

upon completion of the proposed SCR, HICOM will hold 168,164,209 EON Shares, representing the entire issued and paid-up share capital of EON.

On 30 April 2010, the High Court of Malaya confirmed the reduction of the capital of EON pursuant to Section 64 of the Companies Act, 1965 and on 11 may 2010, the sealed court order was lodged with the companies commission of malaysia. the scr was completed on 17 June 2010. As a result, on 18 June 2010, eon became a wholly-owned subsidiary company of the Group.

Consequently, the entire issued and paid-up share capital of EON was removed from the Official list of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) with effect from 9.00am on Friday, 2 July 2010, pursuant to Paragraph 16.07(b) of the main market listing requirements of Bursa malaysia.

(b) On 16 April 2010, Edaran Otomobil Nasional Berhad (“EON”), a 79.05% owned subsidiary company of the Group, and flora Areana Sdn. Bhd. (“fASB”), a wholly-owned subsidiary company of the Group, entered into a Share Sale Agreement (“SSA”) for EON to acquire 137,500 ordinary shares of RM1.00 each representing 55% of the issued and paid-up share capital in Multi Automotive Service and Assist Sdn. Bhd. from fASB for a total cash consideration of RM137,500 (“Internal Reorganisation”). The Internal Reorganisation is pending the fulfilment of the conditions precedent stated in the SSA.

57 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s overall financial risk management objective is to ensure that the Group creates value for its shareholders. The Group’s financial risk management policy

seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its interest rate, foreign currency exchange, credit, liquidity and cash flow, market, insurance and pricing, operational and profit rate risks.

(i) Interest rate risk The Group’s primary interest rate risk relates to interest-bearing borrowings and investments in marketable securities and other interest-bearing financial

instruments. The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowing instruments. The Group’s exposure to risk that the value of a financial instrument will fluctuate due to changes in market interest rates is provided in the respective notes to financial statement.

(ii) Foreign currency exchange risk The Group is exposed to currency risk as a result of the foreign currency transactions entered into in currencies other than its functional currency. foreign

exchange exposures in transactional currencies other than its functional currency of the operating entities are kept to an acceptable level. Material foreign currencies transaction exposures are hedged, mainly with forward foreign exchange contracts.


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57 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)(iii) Credit risk Credit risk is the potential loss arising from customers or counterparties failing to meet their financial contractual obligations. The Group seeks to control credit

risk by ensuring its customers or counterparties have sound financial standing and credit history. The Group has no significant concentration of credit risk due to its diverse customer base.

(iv) Liquidity and cash flow risk The Group manages its debt maturity profile, operating cash flows and availability of funding so as to ensure that all repayment and funding requirements are

met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. Due to the dynamic nature of the underlying businesses, the Group aims at maintaining flexibility in funding by keeping committed credit lines available.

(v) Market risk Market risk is the potential loss which can arise for positions held by the Group due to adverse changes in the level of market prices or price-influencing

parameters in the financial markets. The adverse changes can occur in interest rate, rate of return, foreign exchange and equity markets. The Group regularly reviews these risks and takes proactive measures to mitigate the potential impact of such risks.

(vi) Insurance and pricing risks The principal activity of a life insurance subsidiary company is to provide insurance protection against risks such as mortality, morbidity, disability and personal

accidents. The mortality and morbidity risks are managed through risk assessment before a policy is underwritten. The maximum underwriting exposure is limited through exclusion, cover limits and reinsurance arrangements. The pricing risk relates to the risk of inadequacy of premium. Re-pricing of product is conducted at regular interval of two (2) years or shorter, if required. Experience studies are conducted to determine realistic assumptions. Stress tests and bonus reserve valuations are done by the appointed actuary to assess the solvency position.

(vii) Operational risk Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. The Group manages risks

strategically through the risk committees.

(viii) Profit rate risk The banking subsidiary company of the Group is exposed to the risk associated with the effects of fluctuations in the prevailing levels of profit rate on the

financial position and cash flows of its portfolio. The fluctuations in profit rate can be influenced by changes in interest rates that affect the value of financial instruments under its portfolio. profit rate risk is monitored and managed by the Risk Management Department to protect the income from operations.

58 APPROVAL OF FINANCIAL STATEMENTS the financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 15 July 2010.


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We, Dato’ syed mohamad bin syed murtaza and Dato’ sri Haji mohd Khamil bin Jamil, two of the Directors of DrB-Hicom Berhad, state that, in the opinion of the Directors, the financial statements set out on pages 124 to 230 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2010 and of the results and the cash flows of the Group and of the Company for the financial year ended on that date in accordance with the provisions of the Companies Act, 1965 and MASB Approved Accounting Standards in Malaysia for Entities Other than private Entities, modified by the accounting policies set out in the Bank Negara Malaysia Guidelines and Shariah principles for a banking subsidiary company of the Group.

in accordance with a resolution of the Board of Directors dated 15 July 2010.

DATO’ SYED MOHAMAD BIN SYED MURTAzA DATO’ SRI HAJI MOHD KHAMIL BIN JAMILChairman Group Managing Director

I, Dato’ lukman bin Ibrahim, the officer primarily responsible for the financial management of DRB-HICOM Berhad, do solemnly and sincerely declare that the financial statements set out on pages 124 to 230 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

DATO’ LUKMAN BIN IBRAHIM

subscribed and solemnly declared by the abovenamed Dato’ lukman bin ibrahim at shah Alam in malaysia on 15 July 2010.

Before me,

Commissioner for Oaths

statement bydirectors

statutorydeclaration

pursuant to Section 169(15) of The Companies Act, 1965

pursuant to Section 169(16) of The Companies Act, 1965


231

REPORT ON THE FINANCIAL STATEMENTSwe have audited the financial statements of DRB-HICOM Berhad, which comprise the balance sheets as at 31 March 2010 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 124 to 230.

Directors’ Responsibility for the Financial StatementsThe Directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Companies Act, 1965 and MASB Approved Accounting Standards in Malaysia for Entities Other than private Entities, modified by the accounting policies set out in the Bank Negara Malaysia Guidelines and Shariah principles for a banking subsidiary company of the Group. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. we conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and MASB Approved Accounting Standards in Malaysia for Entities Other than private Entities, modified by the accounting policies set out in the Bank Negara Malaysia Guidelines and Shariah principles for a banking subsidiary company of the Group, so as to give a true and fair view of the financial position of the Group and of the Company as of 31 March 2010 and of their financial performance and cash flows for the financial year then ended.

independentauditors’ reportTo The Members of DRB-HICOM Berhad (Incorporated in Malaysia) (203430-w)


232

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTSIn accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) we have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 3 to the financial statements.

(c) we are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

OTHER MATTERSThis report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. we do not assume responsibility to any other person for the content of this report.

PRICEWATERHOUSECOOPERS MOHAMMAD FAIz BIN MOHAMMAD AzMI(no AF: 1146) (no.2025/03/12(J))Chartered Accountants Chartered Accountant

Kuala lumpur15 July 2010


233

other

information235 ANAlySIS Of SHAREHOlDINGS238 SHARE pERfORMANCE CHART239 MATERIAl pROpERTIES Of DRB-HICOM GROup241 GROup CORpORATE DIRECTORy245 NOMINATION Of AuDITORS • Form oF Proxy


234

analysis ofshareholdings

As At 21 July 2010

Class of Securities : Ordinary shares of RM1.00 eachAuthorised Share Capital : RM2,000,000,000.00Issued and fully paid-up Capital : RM1,933,237,051 comprising 1,933,237,051 ordinary shares of RM1.00 eachVoting Rights : Every member of the Company present in person or by proxy shall have one vote on a show of hands, and in the case of poll,

shall have one vote for each share he holds.Number of Shareholders : 48,790

DISTRIBUTION OF SHAREHOLDERS

Size of ShareholdingsNumber of

Shareholders% of

Shareholders Total Holdings % Holdings

1 – 99 464 0.95 10,810 0.00*

100 – 1,000 22,424 45.96 16,693,628 0.86

1,001 – 10,000 21,653 44.38 80,343,773 4.16

10,001 – 100,000 3,816 7.82 108,445,533 5.61

100,001 – 96,661,851(**) 429 0.88 411,279,929 21.27

96,661,852 and Above(***) 4 0.01 1,316,463,378 68.10

Total 48,790 100.00 1,933,237,051 100.00

Remarks: * less than 0.01% ** less than 5% of issued shares *** 5% and above of issued shares

TOP THIRTY SECURITIES ACCOUNT HOLDERS(without aggregating the securities from different securities accounts belonging to the same Depositor)

Name Number of Shares% of

Issued Shares

1. Etika Strategi Sdn. Bhd. 944,098,391 48.84

2. EB Nominees (Tempatan) Sendirian BerhadPledged Securities Account For Etika Strategi Sdn. Bhd. (KLM)

136,963,350 7.08

3. Employees provident fund Board 136,191,200 7.04

4. Khazanah nasional Berhad 99,210,437 5.13

5. AmanahRaya Trustees BerhadSkim Amanah Saham Bumiputera

58,080,100 3.00

6. Citigroup Nominees (Tempatan) Sdn. Bhd.CMS Trust Management Berhad For Employees Provident Fund

35,387,500 1.83


235

analysis of shareholdings (continued)


Issued Shares

7. Amsec Nominees (Tempatan) Sdn. Bhd.CMS Trust Management Berhad For Tenaga Nasional Berhad Retirement Benefit Trust Fund (RB-TNB-CMS)

14,153,600 0.73

8. AmanahRaya Trustees BerhadAmanah Saham Wawasan 2020

11,092,100 0.57

9. Cimsec Nominees (Tempatan) Sdn. Bhd.CIMB Bank Berhad (ETP)

11,060,300 0.57

10. Tai Tak Estates Sdn. Bhd. 10,952,653 0.57

11. permodalan Nasional Berhad 10,275,000 0.53

12. HSBC Nominees (Asing) Sdn. Bhd.Exempt An For JPMorgan Chase Bank, National Association (NORGES BK NLEND)

10,000,000 0.52

13. Citigroup Nominees (Asing) Sdn. Bhd.CBNY For Dimensional Emerging Markets Value Fund

9,932,000 0.51

14. Citigroup Nominees (Asing) Sdn. Bhd.UBS AG Singapore For Focus Oriented Corporation

9,068,900 0.47

15. Citaria Sdn. Bhd. 8,873,972 0.46

16. M & A Nominee (Asing) Sdn. Bhd.Exempt An For UOB Kay Hian Pte. Ltd. (A/C Clients)

7,641,500 0.40

17. Citigroup Nominees (Asing) Sdn. Bhd.UBS AG Singapore For Lien Chin Hui

7,537,900 0.39

18. HDM Nominees (Asing) Sdn. Bhd.Exempt An For UOB Kay Hian (Hong Kong) Limited (Clients)

7,273,600 0.38

19. lembaga Tabung Angkatan Tentera 6,137,100 0.32

20. yap Ah fatt 4,600,000 0.24

21. HSBC Nominees (Asing) Sdn. Bhd.Exempt An For Morgan Stanley & Co. International PLC (Client)

4,462,900 0.23

22. Tengku uzir bin Tengku ubaidillah 4,269,100 0.22

23. M & A Nominee (Asing) Sdn. Bhd.UOB Kay Hian Private Limited For Monconcept Investments Pte. Ltd.

4,136,100 0.21

24. HSBC Nominees (Asing) Sdn. Bhd.Exempt An For The Bank Of New York Mellon (Mellon Acct)

3,805,089 0.20

25. Citigroup Nominees (Asing) Sdn. Bhd.UBS AG Singapore For Creon Investments Limited

3,500,000 0.18



236


Issued Shares

26. RHB Nominees (Tempatan) Sdn. Bhd.RHB Investment Management Sdn. Bhd. For Kumpulan Wang Persaraan (Diperbadankan)

3,114,700 0.16

27. Citigroup Nominees (Asing) Sdn. Bhd.CBNY For DFA Emerging Markets Small Cap Series

3,111,600 0.16

28. GEO-Mobile Asia Sdn. Bhd. 3,010,000 0.16

29. HSBC Nominees (Asing) Sdn. Bhd.HSBC SG For Lee Rubber Company Pte. Ltd.

2,962,747 0.15

30. HSBC Nominees (Asing) Sdn. Bhd.Exempt An For JPMorgan Chase Bank, National Association (NORGES BK LEND)

2,402,800 0.12

SUBSTANTIAL SHAREHOLDERS BASED ON THE REGISTER OF SUBSTANTIAL SHAREHOLDERS

Name

Direct Interest Indirect InterestTotal % of

IssuedShares

Number ofShares Held

% ofIssued Shares


% ofIssued Shares

Etika Strategi Sdn. Bhd. 1,081,061,741 55.92% — — 55.92%

Employees provident fund Board 176,078,700 9.11% — — 9.11%

Khazanah nasional Berhad 99,210,437 5.13% — — 5.13%

Tan Sri Dato’ Seri Syed Mokhtar Shah bin Syed Nor — — 1,081,061,741a

55.92% 55.92%

Note:-a By virtue of his deemed interest in the shares through Etika Strategi Sdn. Bhd. in accordance with Section 6A of the Companies Act, 1965.

DIRECTORS’ DIRECT AND INDIRECT INTERESTS IN SHARES IN THE COMPANY AND ITS RELATED COMPANIESThe Directors’ direct and indirect interest in shares in the Company and its related companies based on the Register of Directors’ Shareholdings are as follows:-

Name

Direct Interest Indirect Interest


% ofIssued Share


% ofIssued Share

Shares in Etika Strategi Sdn. Bhd. held by:Dato’ sri Haji mohd Khamil bin Jamil

30,000 10 — —

none of the other Directors in office as at 21 July 2010 held any interest in shares in the company or in its related companies.



237

shareperformance chartSHARE pRICE fROM ApRIl 2009 TO MARCH 2010

0

40

20

60

80

100

120

140

0.0

0.4

0.8

1.2

1.6

Apr ’09 May ’09 Jun ’09 Jul ’09 Aug ’09 Sep ’09 Oct ’09 Nov ’09 Dec ’09 Jan ’10 Feb ’10 Mar ’10

Volume High Low

Volume(million)

Price(RM)


238

AS AT 31 MARCH 2010

No. LocationDescription/ existing use

Approximate age of

building Tenure Approx. area

GroupNet book value

as at31 March 2010

RM’000

1. pTD 99396 HS(D) 329948pTD 68903 HS(D) 290184pTD 68905 HS(D) 290186Mukim of TebrauDaerah Johor BahruJohor Darul ta’zim

land held for residential and commercial development

— freehold 6,137,457sq.m

(land)

727,900

2. lots 1017T, 1018A70000p and 70001Tof Town Subdivision 16Comprised in Certificateof Title Volume 614 folio 67Republic of Singapore

Retail and car park complex 7 yrs leasehold expiring in year 2096

6,341.2sq.m

(Building)

314,878

3. HS(D) 224498 (pT 464), HS(D) 224499 (pT 465)HS(D) 224500 (pT 466), HS(D) 224501 (pT 467)HS(D) 224502 (pT 468), HS(D) 224396 (pT 772)Town of GlenmarieDistrict of petalingSelangor Darul Ehsan

Hotel, Golf Course and Club House

16 – 17 yrs freehold 1,489,712sq.m

(land)

191,918

4. HS(D) 63928, pT 5689HS(D) 63929, pT 5690Mukim GurunDaerah Kuala mudaKedah Darul Aman

Industrial land with office and factory building

14 yrs freehold 650,360sq.m

(land)

163,569

5. lot No. 120-123, p.N. No. 2557 (pT 3254)lot No. 126-133, HS(D) 3579 (pT 7695)lot No. 134, HS(D) 2233 (pT 7680)lot No. 140, HS(D) 3421 (pT 9770)lot No. 142, HS(D) 2211 (pT 6875)Kawasan Perindustrian PeramuMukim pekanpahang Darul Makmur

leasehold industrial land with office and factory blocks

13 yrs leasehold expiring in year 2065

644,903sq.m

(land)

135,444

material properties ofDRB-HICOM group


239

material properties of DRB-HICOM group (continued)

No. LocationDescription/ existing use

Approximate age of

building Tenure Approx. area

GroupNet book value

as at31 March 2010

RM’000

6. lot 77170 and individual titlesfrom master titlesmukim and District of KlangSelangor Darul Ehsan

land held for residential & commercial development

— freehold 447,913sq.m

(land)

126,142

7. Southern Support ZoneKl international Airport64000 SepangSelangor Darul Ehsan

Head Office, Cargo Complex, workshop and Inflight Catering

12 yrs leasehold 50 years expiring in year 2048

55,985sq.m

(Building)

125,565

8. Menara BumiputraJalan melakalot 7 Seksyen 7Pn 6253, town of Kuala lumpurwilayah persekutuan

leasehold land with 35 storey tower blocks

31 yrs leasehold expiring in year 2072

41,641.85sq.m

(land and Building)

91,653

9. GM 1867 lot 1468HS(D) 423-578 (pT 00919-1074)HS(D) 580-588 (pT 1076-1088)mukim KedawangDaerah langkawiKedah Darul Aman

82 units chalet & marina and land held for development

10 – 13 yrs freehold and leasehold expiring in year 2054

1,555,940sq.m

(land)

82,985

10. Menara uni.Asiano. 1008, Jalan sultan ismail50250 Kuala lumpurwilayah persekutuan

Office building (11 floors) 11 yrs leasehold 99 years expiring in year 2078

11,975 sq.m

(Building)

58,314


240

group corporatedirectory

AUTOMOTIVEAUTOMOTIVE CORPORATION (MALAYSIA) SDN. BHD. (52640-w)P.o. Box 34, lot no. 3, Jalan Perusahaan DuaKawasan Perindustrian Batu caves68100 Batu Caves, Selangor Darul Ehsan, Malaysia

Tel : 03-6188 1133/0225fax : 03-6189 4337www.acm.com.my

DEFENCE SERVICES SDN. BHD. (166572-x)lot 1479, B10 Nilai Industrial Estate71800 Nilai, Negeri Sembilan, Malaysia

Tel : 06-799 2255/03-5522 8888fax : 06-799 2723

DRB-HICOM AUTO SOLUTIONS SDN. BHD. (484993-p)level 3, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 8218fax : 03-2052 8222

DRB-HICOM DEFENCE TECHNOLOGIES SDN. BHD. (406420-u)lot 26, Jalan Pengapit 15/19, seksyen 1540200 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-5522 8888fax : 03-5513 3100

EDARAN MODENAS SDN. BHD. (391388-p)level 2, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 8668fax : 03-2052 8685

EDARAN OTOMOBIL NASIONAL BERHAD (119767-x)Kompleks ibu Pejabat eonno. 2, Persiaran KerjayaTaman perindustrian Glenmarie, Seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-7711 2100/2211fax : 03-7803 5929/0009www.eon.com.my

EUROMOBIL SDN. BHD. (596498-M)Audi Centre Glenmarielot 27, Jalan Pelukis u1/46Kawasan Perindustrian temasya, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-7688 7688fax : 03-7688 0028

HICOM AUTOMOTIVE MANUFACTURERS (MALAYSIA) SDN. BHD. (106864-D)Kompleks Automotif DrB-Hicom PekanKawasan Perindustrian Peramu JayaKarung Berkunci no. 726607 pekan, pahang Darul Makmur, Malaysia

Tel : 09-424 4000fax : 09-424 4023

HICOM AUTOMOTIVE PLASTICS (THAILAND) LTD.64/30 Moo 4, Eastern Seaboard Industrial EstateTambon pluakdaeng, Amphoe pluakdaeng Rayong21140 Thailand

Tel : (6638) 656265fax : (6638) 656271

HICOM DIECASTINGS SDN. BHD. (148133-M)lot 16, Jalan sementa 27/91, seksyen 2740000 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-5101 8000fax : 03-5191 2587www.hdsb.com.my

HICOM-HONDA MANUFACTURING MALAYSIA SDN. BHD. (100808-p)Kawasan Perusahaan Bakar Arangpeti Surat 32, 08007 Sungai petaniKedah Darul Aman, malaysia

Tel : 04-421 6622fax : 04-421 9923

HICOM-TECK SEE MANUFACTURING MALAYSIA SDN. BHD. (230574-H)lot 75A & 76, Jalan sementa 27/91, seksyen 2740000 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-5191 6077fax : 03-5191 6091www.hicomtecksee.com.my


241

group corporate directory (continued)

MITSUBISHI MOTORS MALAYSIA SDN. BHD. (680028-M)level 6, Building A, paremba Square, Saujana ResortSeksyen u2, 40150 Shah Alam, Selangor Darul EhsanMalaysia

Tel : 03-7680 6688fax : 03-7622 2238/2239www.mitsubishi/motors.com.my

MOTOSIKAL DAN ENJIN NASIONAL SDN. BHD. (354613-V)Kawasan Perindustrian Gurun08300 Gurun, Kedah Darul Aman, malaysia

Tel : 04-466 8000fax : 04-466 8300www.modenas.com.my

ORIENTAL SUMMIT INDUSTRIES SDN. BHD. (81500-D)lot 5032, Jalan teluk Datuk 28/40, seksyen 2840400 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-5191 2266fax : 03-5191 2267www.osisb.com.my

PHN INDUSTRY SDN. BHD. (206963-V)lot Pt 75-77, Jalan 26/6Kawasan Perindustrian HicomSeksyen 26, p.O. Box 730640710 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-5191 4636fax : 03-5191 4630www.phn.com.my

SUZUKI MALAYSIA AUTOMOBILE SDN. BHD. (676275-w)level 3, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 7555fax : 03-2052 7666/59www.suzuki.net.my

HICOM-YAMAHA MANUFACTURING MALAYSIA SDN. BHD. (108313-M)lot 751, Persiaran Kuala selangor, seksyen 2640400 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-5191 1355fax : 03-5191 1852

HONDA MALAYSIA SDN. BHD. (532120-D)lot 15, Jalan 13/6, 46200 Petaling JayaSelangor Darul Ehsan, Malaysia

Tel : 03-7957 5885fax : 03-7957 4300www.honda.com.my

ISUZU HICOM MALAYSIA SDN. BHD. (285799-T)Kawasan Perindustrian Peramu Jayap.O. Box 6, 26607 pekanpahang Darul Makmur, Malaysia

Tel : 09-424 3800fax : 09-410 1742

ISUZU MALAYSIA SDN. BHD. (664946-H)501D, level 5, Tower D, uptown 5no. 5, Jalan ss21/39, Damansara uptown47400 Petaling Jaya, selangor Darul ehsan, malaysia

Tel : 03-7723 9777fax : 03-7723 9779/9778www.isuzu.net.my

SUZUKI MOTORCYCLE MALAYSIA SDN. BHD. (719683-p)1412, plot 281, prai Industrial Complex13600 prai, pulau pinang, Malaysia

Tel : 04-390 8237fax : 04-398 8422www.suzuki.com.my

TRW STEERING & SUSPENSION (MALAYSIA) SDN. BHD. (87992-D)1447, lorong perusahaan Maju 8Kawasan Perindustrian Prai13600 prai, pulau pinang, Malaysia

Tel : 04-507 0082fax : 04-507 0942

USF-HICOM (MALAYSIA) SDN. BHD. (44265-u)Suite 3.2A, level 3, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 7788fax : 03-2052 7789www.usf-hicom.com.my

ZF STEERINGS (MALAYSIA) SDN. BHD. (87173-H)No. 2528, lorong perusahaan EnamKawasan Perindustrian Prai13600 Butterworth, pulau pinang, Malaysia

Tel : 04-399 8724fax : 04-399 8723


242

MIDEA SCOTT & ENGLISH ELECTRONICS SDN. BHD. (194517-x)no. 16, Jalan chan sow lin55200 Kuala lumpur, malaysia

Tel : 03-9221 1033fax : 03-9221 7204www.see.com.my

PUSPAKOM SDN. BHD. (285985-u)level 3, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 7474fax : 03-2052 7473www.puspakom.com.my

RANGKAI POSITIF SDN. BHD. (572121-p)Suite 4.3B, level 4, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 8787fax : 03-2052 8790

SCOTT & ENGLISH (MALAYSIA) SDN. BHD. (9572-M)no. 12, Jalan Pemaju u1/15, seksyen u1HICOM Glenmarie Industrial park40150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-7805 1111fax : 03-7803 5122www.sne.com.my

SERVICESALAM FLORA SDN. BHD. (367713-x)level 4, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 7922fax : 03-2052 8144www.alamflora.com.my

BANK MUAMALAT MALAYSIA BERHAD (6175-w)38th floor, Menara Bumiputra21, Jalan melaka, 50100 Kuala lumpur, malaysia

Tel : 03-2698 8787fax : 03-2693 4667www.muamalat.com.my

HICOM UNIVERSITY COLLEGE SDN. BHD.level 3, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 8000fax : 03-2052 8078www.icam.edu.my

KL AIRPORT SERVICES SDN. BHD. (333284-T)Jalan KliA s6, southern support ZoneKl international Airport64000 Sepang, Selangor Darul Ehsan, Malaysia

Tel : 03-8778 8000fax : 03-8778 8007www.klas.com.my

UNI.ASIA GENERAL INSURANCE BERHAD (16688-K)9th floor, Menara uni.Asia1008, Jalan sultan ismail50250 Kuala lumpur, malaysia

Tel : 03-2693 8111fax : 03-2693 0111www.uniasiageneral.com.my

UNI.ASIA LIFE ASSURANCE BERHAD (277714-A)uni.Asia life Assurance Building8th Floor, 16, Jalan tun tan siew sin50050 Kuala lumpur, malaysia

Tel : 03-2687 2000fax : 03-2026 6097www.uniasialife.com.my

PROPERTY & INFRASTRUCTURECOMTRAC SDN. BHD. (204108-w)no. 74, Jalan ss21/39, Damansara utama47400 Petaling Jaya, selangor Darul ehsan, malaysia

Tel : 03-7722 1688fax : 03-7722 5699

DESA PUCHONG SDN. BHD. (33943-w)no. 74, Jalan ss21/39, Damansara utama47400 Petaling Jaya, selangor Darul ehsan, malaysia

Tel : 03-7727 4278fax : 03-7727 4878


243

group corporate directory (continued)

HICOM-GAMUDA DEVELOPMENT SDN. BHD. (285780-D)no. 1, Jalan Anggerik Vanilla x 31/xKota Kemuning, seksyen 3140460 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-5122 6100fax : 03-5122 3040www.kotakemuning.net

HICOM INDUNGAN SDN. BHD. (124152-D)level 1, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 8500fax : 03-2052 8511

HICOM MEGAH SDN. BHD. (324218-u)level 1, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 8500fax : 03-2052 8511

HORSEDALE DEVELOPMENT BERHAD (188176-p)level 1, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 8500fax : 03-2052 8501www.horsedale.com.my

GLENMARIE COVE DEVELOPMENT SDN. BHD. (570048-T)level 1, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 8500fax : 03-2052 8501www.glenmariecove.com.my

GLENMARIE PROPERTIES SDN. BHD. (97360-A)(formerly known as HICOM Properties Sdn. Bhd.)level 1, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 8500fax : 03-2052 8511www.glenmarieproperties.com

HICOM BUILDERS SDN. BHD.no. 74, Jalan ss21/39Damansara utama47400 Petaling Jaya, selangor Darul ehsan, malaysia

Tel : 03-7727 4278fax : 03-7727 4878www.hicombuilders.com.my

HICOM FACILITY MANAGEMENT BERHAD (258586-x)level 3, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 8004fax : 03-2052 8147

KENYIR SPLENDOUR BERHAD (253041-D)(owner of Lake Kenyir Resort & Spa)p.O. Box 32, pos Malaysia21700 Kuala BerangTerengganu Darul Iman, Malaysia

Tel : 09-666 8888fax : 09-666 8343www.lakekenyir.com

NIRO CERAMIC (M) SDN. BHD. (169869-M)lot 1, lorong 19/1A46300 Petaling JayaSelangor Darul Ehsan, Malaysia

Tel : 03-7652 9333fax : 03-7652 9322www.nirogranite.com.my

PROTON CITY DEVELOPMENT CORPORATION SDN. BHD. (375217-u)level 1, wisma DRB-HICOMno. 2, Jalan usahawan u1/8, seksyen u140150 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 03-2052 8988fax : 03-2052 8511www.proton-city.com

REBAK ISLAND MARINA BERHAD (183757-T)(owner of Rebak Island Resort Langkawi)p.O. Box 12507000 Kuah, langkawi, Kedah Darul Aman, malaysia

Tel : 04-966 5566fax : 04-966 9973www.tajhotels.com


244


245

DRB-HICOM BERHAD (203430-w)

form ofproxy TwENTIETH ANNuAl GENERAl MEETING

I/we, NRIC/Company No. (Full nAme in BlocK letters)

of (full ADDRESS)

being a member/members of DRB-HICOM Berhad, hereby appoint

(Full nAme in BlocK letters)

of (full ADDRESS)

or failing him/her, the Chairman of the Meeting as my/our proxy to attend and vote for me/us on my/our behalf at the Twentieth Annual General Meeting of the Company to be held at the Glenmarie Ballroom, Holiday inn Kuala lumpur Glenmarie (tel: 03-78031000), no. 1, Jalan usahawan u1/8, seksyen u1, 40250 shah Alam, selangor Darul Ehsan on wednesday, 15 September 2010 at 9.00 a.m. and at any adjournment thereof.

my/our proxy is to vote on the resolutions as indicated by an “x” in the appropriate spaces below. if this form is returned without any indication as to how the proxy shall vote, the proxy shall vote or abstain as he/she thinks fit.

No. Resolution For Against Abstain

1 To receive and adopt the Audited financial Statements

2 To approve the declaration of a final gross dividend of 2.5 sen per share less taxation of 25%

3 To re-elect Director – yBhg Tan Sri Marzuki bin Mohd Noor

4 to re-elect Director – yBhg Dato’ sri Haji mohd Khamil bin Jamil

5 To reappoint Director – yBhg Datuk Haji Abdul Rahman bin Mohd Ramli

6 To appoint Messrs Ernst & young as Auditors

7 To approve the proposed Shareholders’ Mandate for Recurrent Related party Transactions of a Revenue or Trading Nature

Dated this _________ day of _____________________, 2010

Signature(s)/common seal of shareholderNotes:-

1. A member entitled to attend the meeting may appoint not more than two (2) proxies who may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its common seal or under the hand of an officer or attorney duly authorised in writing.

3. The instrument appointing a proxy together with the power of attorney or other authority, if any, under which it is signed or a certified copy thereof, shall be deposited at the Share Registrar’s Office, Symphony Share Registrars Sdn. Bhd., Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time set for holding this meeting.

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CDS Account No.

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